Rakesh Reddy, Director, Aparna Constructions & Estates
“In the aftermath of the COVID-19 pandemic, the Union Budget 2021 was highly anticipated to fuel economic revival. It was to be a balancing act between high expectations and minimal resources. The Budget focused on healthcare – to provide crucial COVID-19 rehabilitation – and infrastructure as key segments to aid in the revival. The infrastructure sector is a key driver of India’s economic growth and is the second largest employer in India. The growth of the sector has a multiplier effect on the growth of the entire economy and must be bolstered.
Rapid development in infrastructure requires a strong inflow of capital. Debt financing of InvITs and REITs will be enabled by making a suitable amendment to attract more investment in the real estate and infrastructure sector. In a positive step for the affordable housing segment, the time period for taking loans in this segment will be extended by one year, until 31 March 2022, to avail additional tax benefits of Rs 1.5 lakh under section 80EEA of the Income Tax Act. The benefit is over and above the tax benefit of Rs 2 lakh on interest on Housing Loan available under section 24(B).
Although several proposals were announced for the benefit of taxpayers, there was no change in income tax slab rates. Disposable income is a substantial constraint on demand so personal tax relief must be addressed by revisiting the tax slabs and also increasing the deduction limit under Section 80C. Such benefits will provide crucial support to the real estate sector.
The Budget also proposed to provide GST relief by reducing inverted GST structures. There are hundreds of old exemptions in indirect taxes which must be addressed. This is a positive step that must be implemented immediately. Although the government continued to provide fiscal and policy support to the real estate sector, it is important for the government to lay the foundation which will provide a strong impetus for demand generation and growth in order to regain the pre-COVID momentum. Policies must be enacted that address raw material price escalations, input tax credits, and reduction in GST rates.”
