The real estate sector welcomed the government’s decision to allocate Rs 48,000 crore in Budget under the Pradhan Mantri Awas Yojana (PMAY) and faster approvals for affordable housing in urban areas but homebuyers expressed unhappiness over the absence of any additional tax deduction on interest paid on home loans or relief for buyers stuck with incomplete projects.
Budget 2022 has allocated an outlay of Rs 48,000 crore under the Pradhan Mantri Awas Yojana, and the construction of 80 lakh homes will facilitate affordable housing. However, there were no incentives for homebuyers in the lower and middle-income groups.
Focus on affordable housing
The allotment of Rs. 48,000 crore for completion of 80 lakh houses this year under the PM Awas Yojna will further boost the affordable housing segment. The PMAY scheme has delivered 53.42 lakh households till date.
Finance Minister Nirmala Sitharaman on February 1 also said that the Central Government will work with the state governments for reduction of time required for all land and construction related approvals, for promoting affordable housing for middle class and Economically Weaker Sections in urban areas.
“We shall also work with the financial sector regulators to expand access to capital along with reduction in cost of intermediation,” she said.
The allocation for PMAY for FY 2021-2022 was Rs 47,390 crore (revised estimates).
However, real estate experts said that a time extension of the credit-linked subsidy scheme would have given affordable and mid-income homebuyers the financial elbow room to make a purchase, adding a standard definition for 60m and 90m affordable homes would have given a bigger boost to the housing industry.
There was no expansion in the income tax deduction on housing loans, nor extensions in some of the concessions announced in earlier budgets, which could have provided a significant boost to the industry from the demand side, said Kapil Banga, Assistant Vice President & Sector Head, ICRA Limited.
"We would have liked if there was more push on the demand side, such as the extension and expansion of the credit-linked subsidy scheme," said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
“An extension on tax exemptions to first-time buyers of affordable homes would have helped further incentivise purchase decisions and accelerate growth in the segment,” said Arvind Subramanian, MD & CEO, Mahindra Lifespace Developers Limited.
Homebuyers agree.
Abhay Upadhyay, President of FPCE and Member, Central Advisory Council, RERA, MoHUA, said that Budget 2022 does not provide any relief to homebuyers who are stuck in long delayed projects and are paying both EMI and rent. Some relief should have been provided.
In the pre-Covid year of 2019, affordable housing share stood the highest - 40% of the total 2,36,560 units launched across the top 7 cities then. While in 2021, the affordable new supply share come down to 26% for nearly the same number of units launched in the top 7 cities (approx. 2,36,700 units).
“Well, not to say that demand for affordable homes had diminished because it still has the maximum demand in India. It’s just that buyers went into a wait and watch mode. Affordable housing demand will gain momentum once the economic impact of the pandemic begins to subside for this target audience,” said Anuj Puri, Chairman – ANAROCK Group.
New legislation to replace SEZ Act
Budget 2022 has proposed that the Special Economic Zones Act would be replaced with a new legislation for the development of enterprise and hubs. It will cover the existing industrial enclaves and enhance the competitiveness of exports.
The introduction of a new legislation that will replace the Special Economic Zones (SEZ) Act, together with proposed reforms in customs administration of SEZs, will enhance export competitiveness, thereby supporting industrial activity and aid the commercial real estate segment, experts said.
“The New SEZ Act will be significant booster for the commercial real estate and can be seen as an enabler for inducing institutional capital flow in the asset class. Announcement of Gati Shakti framework that will focus on the development of multimodal logistics parks and cargo terminals can be noted as great initiative for the warehousing sector. The focus of transit oriented infrastructure development will definitely pave way for more employment hubs thereby, unlocking the residential and commercial build up potential in the key micro markets of a city,” said Dhaval Ajmera, director, Ajmera Realty & Infra India Ltd and secretary of MCHI CREDAI.
Additionally, Infrastructure status to Data Centers will enhance the fast-evolving digital ecosystem in India.
Digitisation of land records
The government has also stated that it will encourage states to adopt unique land parcel identification number to facilitate digitised management of records and meet the objective of “anywhere registration” of deeds and other transfer documents.
It has proposed one-nation-one-registration structural reform for the real estate sector that will facilitate land transactions and sale deed registration from anywhere in the country.
“Digitization of land records will definitely help in faster and smoother digital transactions in real estate in future because currently, people have to go through long legal processes, lengthy transaction cycles due to the absence of digitized land records,” said Akhil Gupta , Co-Founder and CTO, NoBroker.com.
"The establishment of the ‘One Nation One Registration Software’ will have a wide-reaching impact in encouraging registration of documents from across State borders and do away with the hurdle of being physically present for complying with the registration requirements. The Government has a mammoth task at hand as rolling-out this scheme which will require co-ordination on a national level," said Bhoumick Vaidya, Partner, Shardul Amarchand Mangaldas & Co. Also Read: Budget 2022 | FM aims for land record digitisation, focuses on urban settlements near transit systems
Rationalisation of provisions of TDS on sale of immovable property
Budget 2022 has also proposed that 1% TDS will apply on non-agriculture immovable property of over Rs 50 lakh on the basis of sale price or the stamp duty value, which ever is higher, after an amendment in the Income Tax Act. Currently, the TDS is deducted basis only the consideration value of the immobile properties.
"It is proposed to amend section 194-IA of the Act to provide that in case of transfer of an immovable property (other than agricultural land), TDS is to be deducted at the rate of one percent of such sum paid or credited to the resident or the stamp duty value of such property, whichever is higher. In case the consideration paid for the transfer of immovable property and the stamp duty value of such property are both less than fifty lakh rupees, then no tax is to be deducted under section 194-IA," it said.
This amendment will take effect from April 1, 2022.
Budget allocation for Smart Cities Mission, Amrut and Central Vista project
Budget 2022 has allocated a sum of Rs 14,100 crore for the urban rejuvenation mission AMRUT and the Smart Cities Mission.
The government in 2021 had allocated Rs 13,900 crore (revised estimates) for the missions.
Under the SCM, 100 Smart Cities have been selected in four rounds based on an all India competition. All 100 cities have incorporated Special Purpose Vehicles (SPVs). The scheme is aimed at making all Indian cities smart.
The housing and urban affairs minister extended the timeline for the implementation of Smart Cities Mission to June 2023 due to the Covid-19.
All the 100 smart cities selected under the mission can now complete their projects until June 2023.
As per statistics shared by the Union Housing and Urban Affairs Ministry as of November 12, 2021, these Smart Cities have tendered out 6,452 projects worth Rs 1,84,998 crore. Out of these, work orders have been issued in 5,809 projects worth Rs 1,56,571 crore and 3,131 of those projects worth Rs 53,175 crore have been completed, it said.
The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) scheme is targeted at upgrading urban infrastructure across 500 towns and cities. The scheme was launched on June 25, 2015 by Prime Minister Narendra Modi. AMRUT 2.0 was launched by the Prime Minister Narendra Modi on October 1, 2021 with the aim of making the cities 'water secure' and providing functional water tap connections to all households for the period of five years – from FY 2021-2022 to FY 2025-2026.
The Housing and Urban Affairs Ministry has been allocated Rs 2,600 crore in Budget 2022-23 for the construction of non-residential office buildings of the Central Vista project, including the Parliament and Supreme Court.
This is Rs 767.56 crore more than Rs 1,833.43 crore given in the last fiscal.
The redevelopment project of the Central Vista envisages a new triangular Parliament building, a common central secretariat, revamping of the three-kilometre Rajpath boulevard that stretches from Rashtrapati Bhavan to India Gate, a new prime minister's residence and a new Prime Minister's Office as well as a new Vice President's Enclave.
A sum of Rs 2,600.99 has been been allocated for the construction of non-residential office buildings, including the Parliament and Supreme Court of India. For residential purposes, the ministry has been given Rs 873.02 crore.
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