Budget 2021: Builders Reactions On Real Estate Sector Announcement

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Pune, February 1, 2021: In the budget speech, Finance Minister Nirmala Sitharaman spoke about emphasizing the real estate sector. It was announced in the budget that the focus will be on affordable housing and rented house plans. The tax exemption in affordable housing is now extended for another year. That is, it will remain in force till 31 March 2022. Under this, there will be a tax exemption of Rs 1.5 lakh for affordable housing.

Apart from this, Finance Minister Nirmala Sitharaman has also announced to reduce the custom duty on steel to 7.5 percent. This will definitely reduce the cost of building the house. At the same time, financing of InVITs and REITs on behalf of foreign investors will be allowed through amendment in the relevant law. This will bring money in the real estate sector.

Suhas Merchant, President, CREDAI-Pune Metro, said, “It’s a very good budget as the time limit for reopening of I-T assessment has been halved to 3 years from 6 years and also it has proposed to exempt senior citizens who are 75 years or above who do not have business income from filing IT returns. Also, there will be no double taxation for NRIs and decrease in residency limit from 182 days to 120 days may encourage NRIs to invest in Real Estate leading to higher investments in the sector. In the situation of the pandemic, there was a fear of a hike in taxes and cess, which did not happen and that is a very positive step from the finance ministry. So overall the budget is satisfactory.”

Satish Magar, President CREDAI National, said, “Section 80IBA for affordable housing has been extended by one year, which was expected due to the pandemic situation. Also scrapping of duties on steel may reduce the steel prices, which will help in keeping the overall housing prices intact. With the hike in Foreign Direct Investment (FDI) in insurance to 74 percent, there will be more liquidity in the market.”

Shantilal Kataria, Vice President, CREDAI National, said, “The focus on the Prime Minister’s Housing Scheme and affordable and rental housing projects is the need of the hour in this year’s budget as in this bracket about 90 percent of the population will get covered in the country. Also, the extension of Section 80IBA by one year under which Rs. 1.50 lakhs additional deduction is available is now extended to March 31, 2022, on the background of the pandemic situation. This was the demand from CREDAI and therefore we welcome the budget and are thankful to the finance ministry.”

Commenting on the Union Budget 2021, Rohit Gera, MD, Gera Developments said, “The scale of the impact of the pandemic is indicated in the fiscal deficit being at 9.5% of GDP for the year. Given the challenges, the Finance Minister has done a good job with regards to focusing on pushing the growth drivers of the economy. The push of capital expenditure is positive as is the disinvestment as well as monetization of assets to generate revenue for the government. Record GST collections in the last few months as a result of simplification and increased technology-led vigilance will continue to help boost revenues for the government.

With regards to the real estate sector, the government has continued on its stated path of doing away with sector-specific sops and in light of this, the extension of the interest rate deduction for home buyers as well as the extension of tax holiday for affordable projects by one more year is welcome. Simplification of processes and rules for the SME segment will help ease the cost and efforts of compliance which is very good for the SME sector.”

Vishal Gokhale, Chairman Gokhale Constructions, said, “It was expected that the budget will emphasize on healthcare and infrastructure, however considering the contribution of Real Estate sector to the economy and job creation, some relief was expected, which was completely missing in the budget. Hope certain steps in the budget will improve the economic conditions.”

Sachin Kulkarni, MD, Vastushodh Projects, said, “Though the budget looks good on the overall economic improvement, it was disappointing for the Real Estate sector. Some long pending demands of the sector were expected to be addressed in this budget that could have helped the ailing Real Estate industry in the current situation, which did not happen.”

Krishna Kumar Goyal, Chairman and Managing Director, Kohinoor Group, said, “Given the current state of the economy against the backdrop of the pandemic, the Finance Minister has taken the right steps to revive the economy. This was also reflected in the atmosphere of excitement in the stock market today. It is important that the National Faceless IT Tribunal brings transparency in income tax claims. The housing sector will benefit from the absence of double taxation for NRIs and a reduction in the length of stay in the country. The additional tax deduction of Rs 1.5 lakh on affordable housing will be extended till March 31, 2022. The period of revision of income tax returns has been reduced from six years to three years, which will benefit all taxpayers. We had demanded that the definition of affordable housing be changed from Rs 45 lakh to Rs 75 lakh in view of rising inflation, but no concrete announcement was made.”


Rajiv Parikh, President, CREDAI Maharashtra, said, “To boost the sale of affordable housing, the Finance Minister has extended the eligibility of deduction of interest amounting to Rs 1.5 Lakhs for the loan taken to purchase an affordable house for one more year till Mar 31, 2022. Further, a tax holiday on affordable housing projects for one more year will surely keep the real estate market moving.

Even the tax exemption for notified rental housing projects for affordable rental housing to migrant workers will help the rental market.

The proposed increase of safe harbour limit from 10% to 20% for the specified primary sale of residential units will surely incentivize home buyers and real estate developers.

Debt Financing of InVITs and REITs by Foreign Portfolio Investors will be enabled which will ease access of finance to InVITS and REITs thus boosting funds for infrastructure and real estate sectors.

These are small factors that will give some relief to the real estate market. But on the contrary, the expected rise in petrol & diesel prices will escalate the cost of basic construction material which inadvertently affect the real estate industry.”

Abhishek Jain, Chief Operating Officer, Satellite Developers Private Limited (SDPL), said, “The Union Budget 2021-22 continued the government’s focus on the affordable housing sector. The government’s decision to extend tax holiday for affordable housing projects by another year is a step in the positive direction to boost the sentiments among real estate players in the market and achieve the government’s vision of ‘Housing for All by 2022’ for India. This budget has focussed heavily on infrastructure that will indirectly lift the housing demand, especially in the Tier II & Tier III cities. Also, the Government’s continuous efforts to promote affordable housing will help the real estate sector business in a long way going forward.” 

Ashok Mohanani, President – NAREDCO Maharashtra, said, “The Government has put their best efforts to put the economy back on track after the adverse effects of Covid-19 pandemic that the entire country went through. It has focussed a lot on infrastructure in this budget. This will indirectly help boost the housing demand, especially in the Tier II & Tier III cities.

The Government’s decision to further infuse Rs 20000 crore for public sector banks will help address liquidity issues to a large extent. The proposal to extend the Rs 1.5 lakh benefit on interest paid on affordable housing loans by one year to March 31, 2022, is an exceptional move which will boost the affordable housing segment and help to achieve the Prime Minister’s vision of Housing for All. It will also ensure that more and more homebuyers get to avail of this benefit. The reduction in the tax burden on senior citizens above 75 years will give a push to senior-living projects.

Also, the Government’s continuous efforts to promote ease of doing business and digitization will help the real estate sector business in a long way going forward. As anticipated, it’s a very futuristic budget from the economy point of view.”

Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd., said, “The Union Budget has packed some great ideas and a definite direction for strong economic growth ahead, especially through infrastructure, capital expansion and banking and financial services. For real estate, the move to extend the tax holiday available for the purchase of affordable houses as well as for the affordable rental housing projects is a welcoming move as it would further strengthen the confidence among both developers and homebuyers. The move will certainly prompt more demand, especially among first-time buyers who generally fall in the lower and mid-income segments. Also, the extension of the tax holiday on affordable housing projects for developers by another year will increase the project launches in this segment as they would get additional time and resources. Apart from this, the mega infrastructure development and upgradation to be undertaken across India will add much value to the real estate sector.” 

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, said, “It’s a pragmatic & forward looking budget, at the same time. The estimated, gradual reduction in the fiscal deficit from 9.5% to under 4.5% by 2024-25 will help boost consumption in the economy. The government’s big bet on infrastructure is bound to pay off in the long-term & will also catapult desired growth for real estate & the economy. The NPA’s of PSU banks have seen an encouraging reduction from 8.96 to 6.8 trillion by end of Fiscal 2020. The setting up of ARC & AMC for banks troubled with bad loans and NPA’s alongside the further recapitalisation of Rs 20,000 crores will help improve the lending capacity of the banking & financial sector. The government’s decision to extend tax holiday for affordable housing projects by another year is a step in the right direction to realise the PM’s dream of ‘Housing For All by 2022.”

Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com, “Amid a sharp improvement in consumer sentiment with regard to property purchases post the start of the COVID-19 vaccine rollout, the government’s move in the Budget to extend the benefit of additional Rs 1.5 lakh tax deduction on home loan interest, until March 31, 2022, will act as a further impetus to the residential property sector. This move will augur well, especially for the affordable housing segment, which will also benefit from the decision to offer a tax holiday for affordable housing projects for one more year, to boost supply.

The support announced today by the Finance Minister for rental housing too will go a long way in boosting the real estate market and will ease a lot of pressure points in the rental home market. This will also help migrant workers to a great extent and will support them in remaining in metros and other big cities during times of financial hardships such as the one presented by the Covid-19 pandemic. However, the long-standing demand of the real estate industry to expand the definition of affordable housing so as to include homes priced more than Rs 45 lakhs in big metro cities, has sadly not been addressed.

The infusion of lakhs of crores into India’s infrastructure segment, with a focus on improving connectivity, will be particularly beneficial for India’s housing sector. The proposed debt financing for REITs and InvITs, and the setting up of the Development Financial Institution for augmenting funds for infra and the real estate sector is expected to provide a major fillip to the sector and will attract more investments in the sector.

The proposed extension of the tax holiday for start-ups by one more year, a tax exemption for relocating funds to IFSC, and a tax holiday for the aircraft leasing business in GIFT city, are some of the other measures that would also help India’s real estate sector as a whole.”