Union Budget 2020: The struggling real estate sector, which is a big job provider and consumer of cement, steel and other items, hopes a boost from the government in the upcoming Budget, which in turn would stimulate the slowing economy.
The main problem behind the slowdown in the economic growth is lower demand. So, to make more disposable income available in the hands of taxpayers, it is expected that relief in income tax may be given to create more demand.
As buying properties need higher investments, along with relief to small taxpayers, the real estate sector wants some relief for middle-income groups also in form of removal in surcharges, which would help in clearing unsold stocks and would enable the real estate players start new projects.
"With a lot of talk about the current Indian economy, slowing GDP, we expect an increase in the standard deduction with income slab and not fixed slab, reduction of tax burden and restructuring of tax slabs. Removal of tax surcharge for the middle class will also help in boosting consumption," said Amit Jain – MD, Arkade Developers.
The industry also hopes that, to provide stimulus and promote the buying sentiment in the market, the government would take some more initiatives like higher deduction on payment of home loan interest u/s 24 of the Income Tax Act.
"A hike in the Rs 2 lakh limit on housing loan interest rate would help increase demand for housing especially in mid-segment and affordable housing categories," said Jain.
Talking on some relief in Goods and Services Tax (GST) for the realty sector, Jain said, "The government should also look at including input tax credit benefit in GST or rationalise GST on steel and cement."
To allow liquidity-hit private realtors avail the benefit of high demand for affordable housing projects, Jain said, "Providing incentives for private sector in affordable housing will help developers to get funding from NBFCs or financial institutes at lower interest rates."
Start of new realty projects would help in boosting the Indian economy as the projects need large number of labourers, it would reduce the joblessness in the unorganised sector, which would create demand pull for FMCG sector.
Demand for cyclical sectors like steel industry, cement industry and others would also increase resulting in higher production and employment in those sectors as well, which in turn would also create higher demand pull to lift the economy.
"The real estate and Infrastructure is the second largest contributor to GDP after agriculture industry, and is in a need of revival," said Jain.