Union Budget 2024-25 – Top 10 Highlights for Real Estate

On 23rd July 2024, Finance Minister, Nirmala Sitharaman presented the Union Budget 2024-25. This was the seventh budget presented by Nirmala Sitharaman and the first budget of the new NDA Government. 

Amid global challenges, India’s GDP is likely to grow at 6.5-7% in the current financial year and the fiscal deficit is estimated to be 4.9% of GDP.

Here are the top highlights of the budget for the real estate sector:

1. Boost to Affordable Housing

Under the Pradhan Mantri Awas Yojana – Urban 2.0, the housing needs of 1 crore poor and middle class families will be addressed with an investment of Rs 10 lakh crore. The investment includes Rs 2.2 lakh crore of central assistance over the next 5 years.The Government aims to construct over 3 crore houses under the PMAY scheme in both rural and urban areas.

2. Moderation in Stamp Duty

To make home buying more affordable, the Government will encourage all the state governments to reduce the stamp duty rates. Special consideration for reduced stamp duties on properties bought by women will also be considered.

3. Digitisation of Land Records

As a part of land reforms, the Government aims to digitise all the land records. This includes the introduction of a Unique Land Parcel Identification Number (Bhu-Aadhaar) for all land parcels. Land records in urban areas will be digitised using GIS mapping. This initiative will promote transparency.

4. Strong Focus on Infrastructure

The Government has allocated Rs 11.11 lakh crore for capital expenditure in FY 25. This amount represents 3.4% of GDP. This amount will be exclusively spent on infrastructure development such as roads, railways and power stations.

5. Removal of Indexation Benefit

During the budget, the FM announced that the indexation benefit for property sales would be removed. Indexation adjusts the profit made on selling a property by the inflation rate during the ownership period. This leads to major tax savings. However, this won’t be possible now with the indexation benefit being discontinued, leading to a higher tax burden on real estate transactions.

6. Change in Capital Gains Tax

Long term capital gains tax on property reduced to 12.5% without indexation benefit (previously 20% with indexation). The short term capital gain tax increased to 20% from 15% earlier.

7. Rental Housing Policies

Rental housing with dormitory style accommodation for industrial workers will be facilitated in public private partnership (PPP) mode with Viability Gap Funding (VGF) support.

8. Strong Focus on Rural & Urban Development

The budget allocated Rs 2.66 lakh crore for rural development, including rural infrastructure. Government will also put efforts in improving urban infrastructure, including water supply, sewage treatment in 100 large cities.

9. Transit Oriented Development

Government announced plans for transit oriented development in 14 large cities with a population of over 30 lakh.

10. Industrial Parks Across 100 Cities

The Government will focus on creating plug-and-play industrial parks across 100 cities. 12 industrial parks will be set up under the National Industrial Corridor.