How the Budget 2024-25 Supports the Real Estate Sector

On July 23, 2024, Nirmala Sitharaman, the Finance Minister, presented the Union Budget 2024-25 in the Lok Sabha. For the seventh consecutive year, she noted that India’s inflation remains low and stable, moving towards the 4% target, with core inflation at 3.1%.

Sitharaman outlined the government’s focus on nine key priorities designed to foster growth: enhancing productivity and resilience in agriculture, promoting employment and skill development, advancing social justice, expanding manufacturing and services, improving urban infrastructure, ensuring energy security, supporting innovation and R&D, and implementing next-generation reforms.

Pradhan Mantri Awas Yojana (PMAY)

A major highlight of the budget is the allocation for an additional three crore homes under the Pradhan Mantri Awas Yojana, targeting both urban and rural areas. This ambitious initiative will address the housing needs of one crore urban poor and middle-class families, backed by an investment of ₹10 lakh crore, including ₹2.2 lakh crore in central assistance over the next five years. The scheme also includes provisions for interest subsidies to make home loans more affordable.

Transit-Oriented Development

Plans for transit-oriented development will be rolled out in 14 large cities with populations exceeding 30 lakh, covering both implementation and financing strategies.

Rental Housing

The government aims to streamline taxation policies and regulations to foster efficient and transparent rental housing markets. There will also be a push for rental housing models, including dormitory-style accommodations for industrial workers, in public-private partnership (PPP) mode, with viability gap funding (VGF) support and commitments from anchor industries.

Stamp Duty Reforms

The Finance Minister proposed encouraging states that impose high stamp duties to reduce their rates and further lower stamp duties for properties purchased by women. This initiative is aligned with broader urban development reforms.

Land-Related Reforms by State Governments

State governments will undertake land-related reforms and actions in both rural and urban areas, covering:

Land Administration, Planning, and Management

Urban planning, usage, and building bylaws

These will be incentivized for completion within the next three years through appropriate fiscal support.

Rural Land-Related Actions

Rural actions will include:

Assignment of unique land parcel identification number (ULPIN) or Bhu-Aadhaar for all lands

• Digitization of cadastral maps
• Survey and subdivision as per current ownerships
• Establishment of a land registry
• Linking to farmers’ registry
• Urban-Related Actions

Land records in urban areas will be digitized with GIS mapping. An IT-based system for property record administration, updating, and tax administration will be established to improve the financial position of urban local bodies.

Cities as Growth Hubs

The government will work with state governments to develop cities as growth hubs, focusing on economic and transit planning, as well as the organized development of peri-urban areas through town planning schemes.

Creative Redevelopment of Cities

A new framework will be created to enable creative brownfield redevelopment in cities, focusing on transformative impacts through market-based mechanisms, regulations, and policies.

Long-Term Capital Gains

The budget proposes a 12.5% tax rate on long-term gains from all financial and non-financial assets. Additionally, the exemption limit for capital gains on certain financial assets will be increased to ₹1.25 lakh per year, benefiting the middle class.

Andhra Pradesh Capital Development

In line with the Andhra Pradesh Reorganization Act, the central government will provide special financial support for the development of the state capital. ₹15,000 crore will be allocated in the current financial year, with more funds to be released in subsequent years.

National Company Law Tribunals

The Insolvency and Bankruptcy Code (IBC) has successfully resolved over 1,000 companies, recovering more than ₹3.3 lakh crore for creditors. To further streamline the process, additional tribunals will be established, with some dedicated to handling cases under the Companies Act.

PM Surya Ghar Muft Bijli Yojana

The PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants, providing free electricity for up to 300 units per month to one crore households. The scheme has already received significant interest, with more than 1.38 crore registrations, and the government plans to continue promoting it.

Industrial Parks

The government will develop “plug-and-play” industrial parks equipped with full infrastructure in or near 100 cities, in collaboration with states and the private sector. Additionally, twelve industrial parks will be sanctioned under the National Industrial Corridor Development Programme.

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