The Finance Minister, Nirmala Sitharaman, announced the Union Budget 2023 on 01 February 2023 amidst high expectations from stakeholders, including taxpayers, investors and consumers. She has announced several points that are likely to impact the sector positively.
The Finance Minister tabled her fifth Union Budget, built upon Amrit Kaal’s foundations, a 25-year lead-up from 75 years of India’s Independence to 100 years of Independence.
There have been various direct and indirect measures in the Indian Union Budget 2023 that aim to develop the real estate and infrastructure sector in India in the upcoming years.
The budgetary measures and financial policies have been formulated considering that the real estate and infrastructure sector significantly impacts the country’s economic growth and infrastructural development.
The real estate industry hoped that several measures of the union budget would help alleviate the sector’s stress. 7% economic growth is expected by the finance minister for fiscal years 2023-24. Look at the main points of the union budget 2023 and their impact on the real estate developers.
10 Key Schemes for the Real Estate Sector
Various vital schemes have been introduced in the Indian Union Budget 2023 which would have a direct impact on the real estate sector, which are as follows:
1: Economic Boosters
Besides the expected 7% economic growth, planned capital expenditure of Rs 10 lakh crore, a YoY increase of 33%, would be seen across the country. This will improve the cash liquidity in the market and, thereby, benefit the real estate sector in India.
2: Infrastructure Development
The finance minister included the upgradation of 50 airports and ports in the budget. The Infrastructure Finance Secretariat will support investing in infrastructure projects like urban development, power, roads and railways.
The expansion of National Highways was introduced in last year’s budget to exceed 25,000 km. PM Gati Shakti’s plan included a coordinated strategy for developing cargo terminals, motorways, and other infrastructure.
3: Pradhan Mantri Awas Yojana (PMAY)
The Pradhan Mantri Awas Yojana of the Ministry of Rural Development and Ministry of Housing and Urban Affairs aims to provide housing to weaker sections of society. In the budget 2023, the financial outlay for the scheme has reached over Rs. 79 Crores.
The corporate societies will get the higher limit for Tax Deducted at Source or TDS at Rs. 3 crores, along with increased financial outlay.
The funds will be used to construct low-cost housing under the Pradhan Mantri Awas Yojana. This PMAY scheme will bridge the gap between those with no house and those with a place, helping the government achieve its vision of ‘Housing for All.’
4: Urban Infrastructure Development Fund (UIDF)
The finance minister has proposed to set up Urban Infrastructure Development Fund, which National Housing Bank will manage.
The Finance Minister emphasised development and urban planning in Tier 2 and 3 cities with the right and planned growth. The expected availability of this fund is Rs. 10,000 Crores per annum.
Trained professionals for urban planning will be hired through five centres of excellence. There will be a high-level committee comprising urban planners, economists and institutions to recommend urban planning policies, implementation plans, capacity building and governance.
5: Helping Cities With Municipal Bonds
The Finance Minister also said about the property tax reforms in the union budget, which is necessary to raise incentives for cities to improve their credit ratings for municipal bonds. These bonds can help to reduce urban infrastructure problems and improve the real estate sentiment in these areas.
6: GIFT City
Data embassies will attract countries looking for digital continuity solutions with the single window approval and registration system. GIFT city will become one of the landmark global financial hubs in the country through the single window system. IFSCA will be empowered with powers to avoid dual registration, ultimately affecting the real state sector.
7: Smart City Mission
The increased allocation of Rs 16,000 crore will transform the quality of life, seamless infrastructure and mobility, and urban sustainability of multiple cities in India. This will ultimately enhance the real estate potential of such cities in the long term.
8: Ease of Doing Business
The Union Budget 2023-24 includes ease of doing business. Various steps have been taken to reduce compliance and procedures for multiple projects to make governance easier for business houses.
Earlier, there was Unique Land Parcel Identification Number for land record management that would ensure greater accountability and transparency in the real estate sector. But in this budget, proposed plans have been made to translate the land records from regional languages to electronic forms. More than 39,000 compliances have been reduced to make governance more business-friendly.
9: National Infrastructure Development
The development of airports, waterways, railways, and power generation would lead to the development of urban cities, with a greater need for residential and corporate spaces. The finance minister has proposed private-sector investments in these fields.
10: Exemptions For Development Authorities
Anybody in the form of a trust, board, or authority of any Central or State acts to improve the cities, townships, villages, development of housing and planning, etc., will have an exemption on their income. This will ultimately affect the real estate sector.
The finance minister, in Budget 2023, has announced many more strategies to develop the real estate sector. For example, changes in the income tax, exemption for those with an annual income of up to Rs 7 lakh, and the hike in the basic exemption limit to Rs 3 lakh from Rs 2.5 lakh will improve the disposable income of the commoner and which in return will give a fuel to develop real estate sector.
The government supports intelligent city initiatives, promotes sustainable development, and encourages public-private partnerships, which will collectively have a multiplier effect on real estate assets.