Budget 2024 expectations: The real estate sector has a long list of expectations from the vote on account ahead of the general elections. Given the government’s strong commitment to infrastructure development and housing in recent years, stakeholders expect a slew of measures, including some thatcould benefit homebuyers in the vote on account and the Union Budget a few months thereafter.

First on the list is another tranche of the government's contribution to the Special Window for Affordable and MidIncome Housing (SWAMIH) Investment Fund, which has benefited scores of homebuyers and helped convert nonperforming assets to performing assets.

Sponsored by the Ministry of Finance and managed by SBICAP Ventures Ltd, SWAMIH Investment Fund I was the country’s largest social-impact fund specifically formed for completing stressed and stalled residential projects in the affordable-housing and mid-income-housing categories.

In the three years since its inception in 2019, the fund had an outstanding impact in terms of completion of stalled projects. It was instrumental in delivering over 22,500 homes as of March 2023 and aims to complete more than 81,000 homes in the next 3-4 years across 30 Tier 1 and 2 cities amid its ambitious expansion plans.

Second - and a long-standing demand - is grant of infrastructure status to real estate, which can help developers secure lower-cost funding from banks, increase the flow of foreign and private capital, and avail tax concessions. Resultantly, developers’ interest cost will decline and they will also get easier access to funds.

Additionally, the status would usher in a more robust approval process in lieu of the current regime, which requires dozens of approvals from different authorities.

Third, the sector is widely expecting input-tax credit in Goods and Services Tax (GST) for residential projects falling in higher GST slabs (projects other than affordable-housing projects).

Alternatively, the sector expects a reduction in GST on cement and steel, which account for a large part of the raw material cost and attract high GST rates at 28% and 18%, respectively.

Fourth, and in another taxation-related measure, developers expect an amendment to Section 23(5) of the Income Tax Act. Under this section, the unsold property of developers is considered as stock-in-trade after two years from the date a completion certificate for a project is issued. The property is then assessed based on the property’s income based on notional rent, which, developers say, puts an additional tax burden. Developers are demanding either abolition of the concept of notional income or an increase in the timeline by five years for considering notional income. Either of these measures will ease their tax burden to some extent and help stabilise real estate prices.

Fifth, the sector expects some announcement aimed at easing the burden of the average middle-class homebuyer, especially with an eye on the upcoming elections.

To be sure, the Pradhan Mantri Awas Yojana (PMAY), an affordable-housing programme targeted at eligible lowto-moderate income households, is well on track to achieve its objectives soon. PMAY–Gramin has been able to meet more than 85% of the target it had initially set out to achieve. With more than one crore houses in various stages of construction, PMAY–Urban too is on track to achieve its objectives.

Thus, the focus could well shift to the higher middle-income group, which was not eligible for assistance under PMAY.

Sixth on the list is an increase in home loan interest deduction allowed under Section 24 of the Income Tax Act. Under the current regime, deduction from total income can be claimed for interest paid on home-loan EMIs of up to Rs 2 lakh maximum. An increase in this limit is widely expected as it would provide substantial relief to home-loan borrowers who have had to shell out larger interest payments due to a comparatively higher repo rate over the past fiscal versus previous fiscals.

Such a move will also increase public interest in homeownership due to improved affordability, thereby helping sustain the demand momentum. While the real estate sector has been flying high, with fiscal 2024 being touted as the potentially decadal best year for the sector by many stakeholders, homeownership remains a distant dream for many.