The real estate sector is the second largest contributor to the country’s GDP. The industry has also been instrumental in driving economic growth and stability of the nation. Despite the challenges posed by the Covid-19 pandemic, the sector managed to stay afloat largely due to the robust government policies and resilience shown by industry players.
The government showed its strong support by maintaining providing tax extension for affordable rental housing projects was the need of the hour. Also, extending the tax holiday for another year till March 31, 2022, for affordable housing projects is a positive step in achieving the government’s objective of Housing for all by 2022. Additionally, providing deduction for the interest of Rs. 1.5 lakh paid for the loan taken for the purchase of an affordable house to March 31, 2022, will motivate homebuyers to purchase their dream homes as they will be able to repay their loans much faster thereby speeding up the residential sales. We welcome the Government’s incentives and it will boost the demand and supply in the affordable housing segment.
For developers, we were hopeful that the Government will provide the input tax credit under GST to help developers cut down the construction expenses and boost affordability of homes. We were hoping for the single window clearance that would have been a growth catalyst for the real estate sector. Having said this, even though the recent policies have aided the sector, a lot needs to be done to manage the liquidity crunch and provide quick funding to developers. We are now looking forward to the monetary policy to provide a much-needed boost to the real estate sector and encourage fence-sitters to make buying decisions.