Indirect stimulus for key asset classes

The Budget aimed at providing relief to subsidiary industries such as construction and cooperative societies

February 04, 2022 02:49 pm | Updated 03:16 pm IST

Photo: Nagara Gopal

Photo: Nagara Gopal

The Government’s Union Budget is welcomed by the real estate fraternity. With a strong focus on affordable housing sector and infrastructure development, the Union Budget 2022-23 announcements seem enabling and futuristic. The real estate sector has seen activity towards recovery from COVID-19 challenges on the back of regulatory and liquidity support. This budget may help further to accelerate this momentum and support overall economic growth. The Budget Announcements were aimed at providing relief to the affordable housing sector and subsidiary industries such as construction and Cooperative societies. There were few citations during the Union Budget announcement which provide indirect stimulus for all the key real estate asset classes — commercial, residential and warehousing.

With an aim to provide a boost to the affordable housing mission, the Finance Minister has recommended that over 80 lakh affordable houses will be constructed and delivered by the year 2023. These houses will be constructed under the flagship housing development scheme Pradhan Mantri Awas Yojana (PMAY). It will provide an opportunity for the economically weaker sections of society to own a house at an affordable cost. In addition to this, the Finance Minister has also recommended an allocation of ₹48,000 crore of outlay for the PMAY scheme.

The announcement of five Centres of Excellence for urban design and planning is a positive step that will complement the overall growth of the real estate sector. The heightened and continued focus on the affordable housing sector will help revive the construction and allied industry related to the real estate sector. Although there has been a booster for affordable housing by providing a package of ₹48,000 crore empaneling Prime Minister’s Vision of Housing For All, a standard definition of 60m and 90m affordable homes would have given a bigger boost to the entire housing industry, which indirectly supports 260+ industries across India.

In the Union Budget 2022-23, the Union Government has increased its focus on infrastructure development. Under PM Gati Shakti, the National Highways will be expanded by 25,000 km during the next one year. To improve connectivity, the Government intends to implement the National Ropeway Programme in Public-Private Partnership (PPP). The seven engines under PM Gati Shakti are Roads, Railways, Airport, Ports, Mass Transport, Waterways, and Logistic Infrastructure. Gati Shakti framework that will focus on the development of multimodal logistic parks and cargo terminals can be noted as a great initiative for the warehousing sector. The focus on transit-oriented infrastructure development will definitely pave way for more employment hubs, thereby unlocking the residential and commercial build-up potential in the key micro markets of a city.

Boost to tax payers

Budget 2022 proposal will allow individuals to update their Income Tax Returns (ITR) within two years from the end of the relevant assessment year by paying an additional tax of 25-50% on tax on interest as proposed in Budget 2022. The intent of the proposed Section 139(8A) is to allow genuine taxpayers to file an updated tax return where complete details of certain incomes could not be incorporated in the tax return due to shortage of time provided for filing belated/ revised tax return or due to any other reason. The opportunity of compliance is not intended to be provided to taxpayers who are currently under scrutiny by the tax authorities or who have already availed this opportunity once for a financial year. The Budget highlighted the need to develop Mega Cities and an increased focus on Tier II cities and Tier III cities. These cities are planned to be developed into economic powerhouses in the future. The Government intends to support and work with the States for urban capacity building. To bring a paradigm change in ‘Urban Planning’, the Union Government has announced the constitution of a high-powered committee for making suggestions on policy matters and capacity building related to urban infrastructure development. The Finance Minister opined that Urban Planning could not continue with a business-as-usual approach.

Level playing field

With an aim to reduce the burden on the Cooperative societies, the Union Budget has proposed to reduce the Alternative Minimum Tax from 18.5% to 15%. The surcharge has also been reduced to 7% for income from ₹1 crore to ₹10 crore. Currently, cooperative societies are required to pay Alternate Minimum Tax at the rate of 18 and one half per cent. However, companies pay the same at the rate of 15%. To provide a level playing field between cooperative societies and companies, the Finance Minister has reduced the surcharge.

The grant of the infrastructure and energy storage systems showcases the seven engines under PM Gati Shakti i.e. Roads, Railways, Airport, Ports, Mass Transport, Waterways, and logistic Infrastructure. This will boost the infrastructure and construction industry across the country.

The adoption of National Generic Document Registration System is aimed at enabling a uniform process for ‘anywhere registration’ of deeds and documents. The facility for transliteration of land records across any of the Schedule VIII languages will help to realise the country’s economic potential, including livelihood opportunities for the demographic dividend.

The writer is Director, Ajmera Realty & Infra India Ltd. and Hon. secretary, MCHI CREDAI.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.