The Indian real estate market accounts for at least 6% of the total GDP of the country. The sector has given employment to nearly 18% of the workforce and supports more than 350 industries. 2018 ended on a good note, but it was not as good as it was expected. Despite hitting good sales digits, there were issues pertaining in the realty sector that have successfully kept the real estate developers and homebuyers in dilemma.
2018 was also one of those years where some of the most renowned developers of the country came into limelight. This was not because of their achievements but for their insolvency proceedings. But, one thing that has bothered the most to the industry experts was the matter of cash crunch and reduced liquidity in the market. The severity of the issue is so high that it has blown an alarm in the entire real estate industry.
With the presentation of the Union Budget 2019 on 1st February, the real estate sector is relying a lot on it. So, let’s find out what real estate expects in Union Budget 2019.
Anticipation from Union Budget 2019
After going on a rough patch at the end of the year and facing several other difficulties, the year 2019 is expected to be a year which can bring the much-needed stability in the market. Apart from this, the government aims to take some audacious decision in the Union Budget 2019 so that it can revive the real estate industry to a great extent. Some of them are listed below:
Reduced GST Rate
Though developers and homebuyers have several demands but the one that is critical of them all is the reduction of Goods and Service Tax (GST) rate. The real estate sector comes under the 18% GST bracket in addition to 33% mandatory abatement for land purchase. Collectively, it possesses a cost burden on developers.
Recently, the government gave indications to cut down the GST on under-construction homes to 5%. The industry expects the final declaration on this in the upcoming Union Budget 2019.
Reduction in Stamp Duty
Stamp Duty is always considered as an additional burden which is responsible for the increase in the overall cost for homebuyers. Things become more confusing when there is no uniform rate in the country. While the stamp duty is charged at 7% in Ghaziabad whereas it is just 5% in Noida. The industry experts hope that the centre may order state governments to either abolish or merge the stamp duty charges with the existing GST regime in the Union Budget 2019.
Real estate is a risky sector owing to the longer time taken for the completion of a project and approvals. The authorities who are responsible to give required approvals take more than the usual time which further adds to delays and in the total cost of the project. However, Real Estate Regulation Act (RERA) has worked successfully to a great extent in bringing the transparency and expedite the approval process. The Union Budget 2019 should further consolidate these processes and look to implement single-window clearance.
The Indian real estate market is one of those sectors that is significantly contributing in the country’s GDP and is fourth largest in term of giving employment. Despite all these facts, the sector is yet to get industry status. So, this Union Budget 2019 the sector hopes the government to grant it its industry status. This will help developers to get funds at a lower rate of interest which will directly cut the project cost.
Cheaper Home Loans and Reduction in Tax Slab
Cheaper home loans are one of the key demands from homebuyer’s point of perspective. The homebuyers also keeping an eye to get income tax rebates on the repayment of the loan in the Union Budget 2019. The homebuyers expect the government to hike income tax deduction on interest to 5 lakhs in Tier 1 cities. The revised tax slab will help even the salaried homebuyers to invest into real estate.