Impact of Indian Union Budget 2023 on the Real Estate Sector

The Indian Union Budget 2023 was laid down in Parliament on 1^st February 2023. The present budget is the last budget before the 2024 elections. In the Union budget 2023, the real estate industry has been subjected to various programs to boost the development of the sector and ensure growth from various ends.

There have been various measures, both direct and indirect in the Indian Union Budget 2023 that aim to expand the real estate and infrastructure sector in India in the upcoming years. The budgetary measures and financial policies have been formulated keeping in mind the multiplier impact that the real estate and infrastructure sector has upon boosting the economic growth, employment production, and infrastructural development of the country.

Key Schemes For Real Estate Sector Under Union Budget 2023

There are various key schemes that have been introduced or empowered under the Indian Union Budget 2023 that have direct bearing upon the real estate sector which are as follows:

1. Pradhan Mantri Awas Yojana (PMAY)
   • The Pradhan Mantri Awas Yojana is governed under the Ministry of Rural Development and Ministry of Housing and Urban Affairs and aims to provide housing to less privileged sections of the society. In the budget 2023, the financial outlay for the scheme has been enhanced by 66% and has reached over Rs. 79 Crores.
   • Along with the increase in financial outlay, the higher limit for Tax Deducted at Source or TDS at Rs. 3 crores has also been provided especially to corporate societies.
   • The finance minister has also proposed to alter the framework pertaining to calculation of capital gains when joint development of property takes place to include the amount received through other sources such as cheques etc., under the ambit of consideration.
2. Economic boost to real estate sector
   • According to the finance minister, the economic growth of the country has been forecasted at 7% for the Financial Year 2023 – 2024, and along with a capital expenditure which is planned to be around Rs.10 Lakh Crores, an increase in developmental activities in real estate and infrastructure is expected which would lead to attracting more institutional investors. With an increase in the investments in the economy, the cash liquidity in the market would improve and therefore boostthe real estate sector.
3. Urban Infrastructure Development Fund (UIDF)
   • Along with the Rural Infrastructure Development Fund, the finance minister has proposed setting up Urban Infrastructure Development Fund which will be managed by National Housing Bank.
   • The main purpose of this fund will be to boost infrastructural development in urban areas with a focus on tier 2 and tier 3 cities. Moreover, it has also been planned that states would be encouraged to utilize the grants from the 15^th Finance Commission and it has been planned to have an expected availability of Rs. 10,000 Crores per annum for the program.
4. Exemptions for development authorities
   • According to the Indian Union Budget 2023, it has been proposed that anybody in form of a trust, board, or authority other than a company that has been set up under any Central or State act with the objective of improvement of cities, townships, villages, development of housing and planning, etc. would be given an exemption on their income.
5. Programs for sustainable development and green programs
   • Following the sustainable development goals, the states and cities have been encouraged to set up reforms in planning towns and cities to ensure sustainable development and make “Sustainable cities for tomorrow”. Plans have been made to ensure adequate usage of land resources, advanced utilization of urban land and create better opportunities for the real estate sector.
   • Programs have also been laid for setting up green farming, green fuels, and green buildings for ensuring efficient utilization of different economic sectors. These measures are expected to reduce the carbon footprint and carbon intensity in development activities and increase employment in this sector.
6. National Infrastructure Development
   • The finance minister has proposed private sector investments in various infrastructure projects like the development of airports, waterways, railways, and power generation which will impact the real estate sector in many ways.
   • The long-term impact of these projects would lead to the development of urban cities, with greater need for residential and corporate spaces and would lead to greater recovery of the economy and real estate sector post the COVID-19 pandemic.
7. Improving the Ease of Doing Business index
   • In order to improve the Ease of Doing Business Index in India, various measures have been taken to reduce compliances and procedures for various projects to make governance easier for business houses. Nearly 40,000 compliances have been reduced in both central and state statutes.
   • In the previous Union Budget, Unique Land Parcel Identification Number was introduced for land record management which would ensure greater accountability and transparency in the real estate sector. This year, proposed plans have been made to translate the land records from regional languages to electronic forms.

Conclusion

The Indian Union Budget 2023 has aimed to boost the real estate and infrastructure sector and allied projects.The budget also aims to work around the premise of aiming towards the recovery of the sector post the COVID-19 pandemic and boosting investments in order to generate infrastructural growth and employment.

Moreover, due importance has been given to private players to enter into the field of real estate development along with setting  up of Special Economic Zones and tax benefits. However, there remains scope for reforms such as easing the registration procedures and ensuring some direct measures which would benefit the developers and real estate houses.

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