As the economy is grappling with a once-in-a-century crisis, the industry is pegging high hopes on the government’s outlays and expecting ‘never before’ schemes. The real estate sector is looking to start off 2022 on a strong note after suffering losses in the previous two years due to the impact of the Covid-19 pandemic on the overall economy. To achieve a strong recovery this year, the sector needs strong demand from homebuyers.
The residential sector witnessed a strong comeback in 2021, with housing sales in the top 7 cities rebounding to 90 per cent of pre-COVID levels and new launches reaching 2019 levels. While the housing sector’s prospects generally look upbeat in 2022, it remains to be seen to what extent, if any, the new COVID-19 variant Omicron impacts real estate activity.
“So far, it has not had any seriously dampening impact. However, the sentiment revival in residential real estate during the worst parts of the first and second waves hinged heavily on policy support. The RBI and the government have proactively aided the sector with various demand boosters. The stamp duty cuts, tax benefits extension on affordable housing in last year’s budget were strong moves that made a difference,” explained Anuj Puri, Chairman, ANAROCK Group
“The sector is now looking at government support to further propel growth, the key would be around providing infrastructure status, tweaking the quantum of deductions available under the tax laws for housing loan interest to make them more meaningful, making affordable housing relevant to some of the key markets (MMR, NCR, etc), by amending the definition and extending the period of tax sops available,” said Sumeet Abrol, Partner and REI Leader, Grant Thornton Bharat.
Homebuyers are expecting some positive measures in this year’s union budget 2022, primarily focused on tax benefits. Here is a look at some of the expectations:
Increase home loan deduction limit
There is a need to hike the INR 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act to at least INR 5 Lakh. This could instantly infuse robust demand for housing, especially in the affordable and mid-segment categories, Puri said.
Deductions for home loan principal repayment, over and above existing 80C
Personal tax relief, either via a cut in tax rates or revised tax slabs, would be a welcome move – especially since the last increase in the deduction limit under Section 80C (to Rs 1.5 lakh a year) took place in 2014.
“The time is certainly ripe for a further upward revision, but there is no denying that the government currently lacks the elbow space for such a move. Instead, it may focus on providing more incentives to MSMEs and SMEs struggling post the pandemic. Also, the government spending on infrastructure may further get a boost,” Puri explained.
Read all the Latest Business News here
Comments
0 comment