The Union Budget for 2024-25, is expected to be presented by Finance Minister Nirmala Sitharaman, on July 23 or 24. This follows the recent meeting of the 53rd GST Council, which discussed various proposals to refine tax rates and service exemptions under the GST regime.
Several economic indicators are shaping the context for this budget. The World Bank has raised India’s growth forecast to 6.6% for FY25, and Fitch Ratings projects a GDP growth of 7.2% for the current financial year. Despite a drop in India’s factory output growth and retail inflation easing to 4.75% in May, economic sentiment remains positive with expectations of further moderation in food prices.
India’s construction and infrastructure sector is eagerly anticipating significant reforms ahead of the Union Budget 2024-25.
Expectations from Industry Experts
Sanjay Kumar Sinha, Founder and Managing Director, of Chaitanya Projects Consultancy
“As we look ahead to the Union Budget 2024, we anticipate robust support for sectoral growth. A key transformative move in this direction is the allocation of 11.11 lakh crore rupees for infrastructure development, which is a positive outlook, and we expect its retention in the final budget. The continuity in leadership within the Ministry of Roadways and Railways will ensure streamlined project delivery timelines, vital for sustaining momentum. The strengthening of airport infrastructure and nationwide connectivity through the Udan scheme, as well as the implementation of technology transformation and multi-modal network outlined in the Gati Shakti master plan, the journey for transformative growth has already been placed thereby reducing economic disparities. We are optimistic that the government will potentially reduce the rate of interest which is critical for initiating projects under the BFOT/BOT framework. Additionally, incentives to boost tech, leveraging cutting-edge tools like AI and IoT are crucial and the groundwork is already placed. By addressing these issues India is close to becoming a $7 trillion economy by 2030.”
Varun Sharma, Founder & MD, MVN Aero One
“The year 2023 stands out as a marker of resilience and strong growth fundamentals for India’s real estate landscape. Like a phoenix, the industry rose from adversity and showcased remarkable adaptability despite global uncertainties. As we look ahead to the Budget 2024-25, we are optimistic that government will take proactive steps to boost the demand, rationalize the cost and reduce the regulatory bottlenecks for sectoral constructive health. We anticipate granting industry status to real estate sector which is a long due, tax rationalization to reduce the cost and enhance the affordability for homebuyers is critical, especially for luxury housing. Furthermore, relaxing FDI norms will attract foreign investments, fostering development and innovation within the luxury segment.”
“Increased deductions on home loan interest rates are imperative to improving accessibility to luxury homes, thereby stimulating demand and creating a robust market environment. These initiatives will facilitate not only the sectoral growth and sustainability but also enhance the vitality of economic landscape by generating jobs and driving infrastructure development.”
Ashish Agarwal, Director, AU Real estate
, “As the nation gears up for the Union Budget 2024-25, the real estate sector is brimming with hopeful expectations. The industry is eagerly awaiting policy measures that can catalyze sustainable development, foster growth, and enhance affordability for homebuyers. With the rising demand for housing in both urban and rural areas, the sector is hopeful for strategic tax reliefs and incentives that can empower homebuyers and bolster the overall housing market. The real estate industry is also anticipating policies that prioritize sustainable urban development and infrastructure enhancement, as well as measures to catalyze investment and foster innovation. The sector is confident that the upcoming budget will pave the way for a more vibrant and resilient real estate landscape.”
Ashish Sharma, AVP Operation, Brahma Group
“As we prepare for Union Budget 2024-25, the luxury housing sector anticipates policies favoring sustainable and innovative designs, potentially with incentives for eco-friendly amenities. Moreover, streamlined regulations and targeted tax adjustments could spur investment, raising industry standards. The real estate sector looks forward to reforms like granting industry status, a simplified clearance system, revised GST rules, and enhanced home loan interest rebates ₹5 lakh will stimulate transparency and further increase demand. These measures are likely to be essential in shaping a future where growth is robust, investment-friendly, and inclusive, reflecting India’s journey towards prosperity and development for all.”
Mr Sunil Sisodiya, Founder, Geetanjali Homestate
“The expectations from the upcoming Union Budget under the new government center around the possibility of increased deductions for home loans, particularly aiming to provide a substantial boost to affordable housing initiatives. The sector looks forward to supportive policies that not only facilitate homebuyers but also stimulate growth in the real estate market. The budget presents a crucial opportunity to implement measures that can catalyze the sector’s revival and contribute significantly to India’s economic resurgence. It is imperative to revive and extend significant benefits, such as tax breaks, to encourage developers to construct more affordable housing and to make it possible for customers to acquire such homes. The government needs to take a hard look at adjusting the qualifying cost of properties within cities’ affordable housing segment.”
Mr Suraj Morajkar, the MD of Sun Estates Developers
“In the context of the new government in India, the forthcoming Union budget holds significant weight for the real estate sector. As the industry continues to witness unprecedented growth, the budget must address key expectations to sustain this momentum. In 2024, the demand for residential properties is anticipated to persist, albeit at a moderated pace. This trend is fueled by the nation’s robust economic expansion and the looming prospect of reduced home loan interest rates.
Given the expiration of several interest stimulants for developers and consumers, there is a pressing need to reintroduce and prolong vital incentives. These could include tax concessions aimed at incentivizing developers to focus on constructing more affordable housing units and enabling consumers to access such properties. Moreover, the government must critically assess and potentially revise the qualifying cost criteria for properties categorized as affordable housing within urban areas. This adjustment can significantly enhance accessibility and affordability for prospective homebuyers.”
Mr Vishal Raheja, Founder & MD of InvestoXpert
“As the Union Budget approaches, the real estate industry holds high expectations for initiatives aimed at enhancing urban infrastructure and improving connectivity. Such initiatives can spur demand for residential and commercial properties, building on the unprecedented growth seen in 2023 despite challenges like surging prices and the highest interest rates in six years. The success of the housing market, with record-breaking residential property sales in volume and value, is anticipated to continue into 2024. However, the pace may slow, driven by high economic growth and a hopeful decrease in home loan interest rates.
Annually, the real estate sector presents an ambitious wish list to the Finance Ministry, including industry status for housing and single-window clearance for projects. Key requests this year remain unchanged, highlighting their ongoing urgency. Notably, increasing the Section 24 tax rebate from Rs 2 lakh to at least Rs 5 lakh could invigorate the budget homes market. Reviving and extending expired benefits for developers and consumers is imperative to encourage affordable housing construction and acquisition. The government must also consider adjusting qualifying costs within cities’ affordable housing segments to meet current market realities.”
Amit Goyal, Managing Director, India Sotheby’s International Realty
“In its recent Monetary Policy Committee (MPC) meeting, the Reserve Bank of India (RBI) projected a GDP growth rate of over 7%. Maintaining this growth rate in a year when several global economies are struggling should be a major focus of the upcoming Union Budget.
With the NDA government returning to power for the third consecutive term, we anticipate a bold, growth-oriented budget that charts a plan for the next five years. We expect announcements that will encourage capital investments and increase foreign direct investment (FDI) inflows into India. In the real estate sector, it is crucial to sustain demand for homes, as housing acts as an accelerator for over 200 ancillary sectors.
One significant measure that has been pending for a long time and would benefit both the industry and home buyers is the introduction of a standalone deduction for home loan principal repayment, along with raising the tax breaks on the interest amounts of home loans from Rs 2 lakh to Rs 5 lakh. This move would help mitigate the impact of increased home loan EMIs and provide much-needed relief to home buyers. There is no better time than now to implement this change, which would provide much-needed relief and stimulate growth in the housing market.”
Shubhi Jain, Principal Partner & Head of CRM, Square Yards
“The real estate sector is a cornerstone of our economy, serving as one of the largest employers. We eagerly anticipate significant reforms in the upcoming budget under the new government. Securing industry status will unlock a plethora of legal and administrative benefits, along with much-needed tax incentives. Also, while government’s focus on affordable housing under PMAY is commendable, recalibrating strategies in light of escalating construction costs is imperative for sustained inclusiveness and effectiveness. Moreover, enhanced tax reliefs and increased deductions on home loans, currently capped at INR 2 lakhs, are pivotal in stimulating demand and supporting prospective buyers. With these measures in place, the real estate sector is poised to contribute meaningfully to India’s journey towards a 5 trillion-dollar economy.”
Shrinivas Rao, FRICS, CEO, Vestian
“We anticipate a budget that tackles pressing issues, boosts demand, and drives sustainable growth. As per the announcements in the interim budget, it is evident that the government will continue to focus on infrastructure development to make India a USD 5 Tn economy in the upcoming years and turn the country into a ‘Viksit Bharat’ by 2047. To achieve this goal, the real estate sector is likely to play a pivotal role.”
Mr. Rao further added, “After resuming a third term, the government has already announced the construction of 3 crore new units under PMAY. This shows the government’s commitment towards the real estate sector. Demand for residential units is expected to increase further, if the government increases tax exemption limits for home loans in the Union Budget 2024-25. Moreover, granting industry status to the real estate sector would ease availability of funds and increase participation of foreign investors.”
Badal Yagnik, Chief Executive Officer, Colliers India
“The real estate community looks at the upcoming budget with optimism, seeking a strategic roadmap that aligns well with evolving needs of stakeholders including end-users developers & investors. Housing, infrastructure development, sustainability and digitization will remain at the core of the budget, which will go a long way in supporting real estate growth across segments in long term. EV infrastructure, renewable energy and green financing will continue to remain in focus creating a strong base for a sustainable future. Incentivisation of green buildings through minimum alternate tax or tax breaks similar to the infrastructure sector will be particularly beneficial. Meanwhile, retail investors are calling for additional rationalising of the capital gains tax structure. The Union Budget 2024-25 should explore initiatives to boost greater retail engagement in REITs and InvITs. Moreover, alterations to personal tax slabs have the potential to fuel consumption across various sectors, including real estate assets and allied sectors.”
Dharmendra Raichura, VP Finance at Ashar Group
“As the Indian real estate industry anticipates Budget 2024, it seeks measures to enhance housing accessibility and affordability. One such proposed initiative could be to increase tax exemption limits on both the principal and interest paid on home loans. Additionally, providing tax incentives for developers focusing on affordable housing could stimulate supply to meet the growing demand in both urban and rural areas. Reintroducing a 100% tax holiday for affordable housing projects under Section 80IBA is also recommended.
Moreover, with the Real Estate (Regulation and Development) Act (RERA) now implemented across most states, granting “Industry” status to the real estate sector could facilitate easier and more cost-effective financing for developers. To address the land shortage in metropolitan and semi-metropolitan areas and to make housing more affordable, the government should consider releasing government-owned lands at reduced costs. This includes lands owned by entities such as Indian Railways and Port Trusts. This strategic initiative is expected to significantly contribute to lowering overall real estate prices.”
Domnic Romell, President of CREDAI-MCHI
“CREDAI-MCHI congratulates the government on its third term and anticipates more financial measures to strengthen the economy under the current administration.Mumbai, as a vital economic engine, must focus on comprehensive city development, including infrastructure improvements and future growth planning.
Given that over 50% of real estate projects in Mumbai are redevelopment projects, the government should consider levying no GST on redevelopment projects. This step would ensure safer, better, and more affordable housing for the citizens of Mumbai.
To address the validated demand for 11.2 million houses, redefining affordable housing for metro cities like Mumbai is critical. A uniform affordable housing criterion for both metro and non-metro cities, without a price cap, should be established, with all houses of 60 sq m declared as affordable housing. Additionally, increasing tax exemptions on home loans and making the interest component on home loans tax-free under the relevant sections of the IT Act are crucial steps to make housing more accessible.
We hope that the government formulates financial policies in a democratic manner, ensuring that the diverse needs of all stakeholders are addressed.”
Looking forward
Industry stakeholders in the construction and infrastructure sectors eagerly await the Union Budget 2024-25, anticipating robust allocations for infrastructure development, streamlined regulatory frameworks, and incentives for sustainable practices. Key expectations include granting industry status to real estate, tax rationalization, increased deductions on home loan interest rates, and reforms to enhance affordability and transparency. Stakeholders emphasize the budget’s role in fostering economic growth, job creation, and attracting investments, pivotal for India’s trajectory towards a $5 trillion economy.