The Union Budget 2023, presented by our Honorable Finance Minister, Nirmala Sitharaman, on 1st February 2023, had several significant announcements related to the real estate investments sector. Here are the ten major announcements that have had a substantial impact on the industry:
- Affordable Housing: The budget proposed to provide tax benefits to individuals who buy affordable houses. This can increase the demand for affordable housing, which will, in turn, boost the real estate sector.
- Affordable Rental Housing Complexes (ARHCs) development: The budget proposed to provide INR 14,000 crore for the development of ARHCs in urban areas. This will help increase affordable rental housing available for the urban population.
- Tax Exemption for REITs: The budget proposed to exempt REITs (Real Estate Investments Trusts) from dividend distribution tax. This is expected to encourage the formation of REITs, which will help to attract more investment into the real estate sector.
- Reforms in the Real Estate Regulation and Development Act (RERA): The budget proposed to make changes to the RERA (Real Estate Regulation Act) to make it more effective in protecting the interests of homebuyers. This is expected to increase the trust of homebuyers in the real estate sector.
- Capital Gains Tax: The budget proposed to increase the holding period for long-term capital gains on real estate from two to three years. This would stabilize the real estate investment market.
- Rural Housing: The budget proposed to provide INR 10,000 crore for developing rural housing, which can increase the availability of affordable housing in rural areas and positively impact the rural economy.
- Increased Investment in Infrastructure: The budget proposed to increase investment in infrastructure, including the development of smart cities, will positively impact the real estate industry.
- Land Bank for Industrial Development: A land bank for industrial development was recommended in the budget. This will contribute to an increase in the availability of land for industrial development, which will benefit the real estate industry.
- Increased Spending on Education: The budget recommended increasing education spending, including developing new educational institutions, which will raise demand for educational real estate investments.
- Increased Spending on Health: The real estate budget in 2023 proposed to increase spending on health, which meant new healthcare institutions that would increase the demand for real estate in the healthcare sector.
Subhash Goel, the Director of Goel Ganga Developments, commented that the budget session extends the Indian government’s commitment to infrastructure growth, urbanization, and affordable housing projects. This will benefit the real estate industry, creating growth and demand. The government has set aside INR 10,000 Crore for infrastructure funds that the National Housing Board will manage, which will help to improve infrastructure in Tier 2 and 3 cities and drive housing demand. The overall capital expenditure has increased to INR 10 lakh Crore, three times higher than in 2019. This capital expenditure is an essential factor in promoting economic prosperity and growth, and it will also create more jobs and increase demand in the real estate market. Additionally, the government has increased the allocation of funds for the PM Awas Yojna (PMAY), which will help to achieve its goal of providing housing for everyone in India.
To conclude, the Union Budget 2023 has several significant announcements expected to impact the real estate sector positively. The proposals to increase investment in infrastructure, provide tax benefits to individuals who buy affordable houses, and make changes to the RERA are expected to impact the industry significantly. The budget’s emphasis on affordable housing and rural development is also expected to boost the real estate sector, positively impacting the economy.