10 Key Takeaways for the Real Estate Sector from Union Budget 2024-25

Article by Suresh Rathore on Budget 2024-25 on Real Estate industry The Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman, brings significant developments and opportunities for the real estate sector. Here are ten crucial points that stakeholders in the real estate industry should take note of: Construction of 3 Crore Houses under PMAY The government has announced the construction of 3 crore houses under the Pradhan Mantri Awas Yojana (PMAY) in both rural and urban areas. This initiative aims to provide affordable housing to millions and will involve substantial allocations. Real estate developers should prepare to engage in projects under this scheme to meet the housing demands. Urban Housing Investment Addressing the housing needs of 1 crore urban residents, the budget allocates ₹10 lakh crore towards urban housing under PMAY. This massive investment will stimulate the urban real estate market, providing ample opportunities for developers and investors. Transit Oriented Development (TOD) The government plans to formulate TOD plans for 14 large cities with populations exceeding 30 lakhs. This strategy promotes the development of high-density, mixed-use neighborhoods around transit stations, offering real estate developers new opportunities to create vibrant, sustainable urban spaces. Industrial Parks Development The budget announces the establishment of industrial parks with complete infrastructure through partnerships between state and private players in or near 100 cities. This initiative will boost industrial real estate, encouraging the development of industrial zones and supporting economic growth. National Industrial Corridor Development Programme Twelve industrial parks will be sanctioned under this programme, enhancing the country’s industrial infrastructure. Real estate developers should look out for these opportunities to participate in the development of these industrial corridors. Rental Housing for Industrial Workers The government will facilitate rental housing with dormitory-type accommodation for industrial workers using the Viability Gap Funding (VGF) model. This initiative will address the housing needs of industrial workers and open new avenues for real estate investors. Moderation of Stamp Duty Rates States charging high stamp duties will be encouraged to moderate rates. Additionally, there is a consideration to lower stamp duties for property purchases by women. This move aims to make property transactions more affordable and could lead to increased real estate activity. Digitalisation of Land Records Urban land records will be digitised using GIS mapping, and an IT-based system will be established. This will not only streamline property transactions but also enhance the financial position of urban local bodies, providing more transparency and efficiency in real estate dealings. Revised Taxation on Capital Gains Long-term capital gains on all financial and non-financial assets will now attract a tax rate of 12.5%, up from 10%. Additionally, the exemption limit for capital gains is set at ₹1.25 lakh per year. This change will impact real estate investments and the financial planning of investors. Increased Tax on Short-Term Gains Short-term gains on certain financial assets will now attract a tax rate of 20%, up from 15%. Real estate investors need to consider this while planning their investments and divestments in the short term. In summary, the Union Budget 2024-25 presents a mix of opportunities and challenges for the real estate sector. With significant investments in housing, industrial parks, and infrastructure development, along with changes in tax policies, stakeholders need to stay informed and strategically navigate these developments to leverage the potential growth in the industry.