Real estate was not only looking for focussed measures to bolster sustained demand, but also needed incentives such as GST waiver for under-construction homes, and hike in home loan tax rebate, among others. However, most of its wishes didn’t get fulfilled.

Hit hard by the Covid-19 pandemic, the real estate sector was betting big on the Budget 2021 for revival of fortunes. It was not only looking for focussed measures to bolster sustained demand, but also needed incentives such as GST waiver for under-construction homes, and hike in home loan tax rebate, among others. However, most of its wishes didn’t get fulfilled.

According to industry experts, this was because the Finance Minister had to do a tight rope walking with very limited elbow room for any big-bang announcement given the over looming fiscal deficit.

“On an overall basis, the Budget 2021 was pragmatic. However, there were very limited announcements for the real estate sector. Long-pending demand of industry status and GST input credit for under construction property would have helped bring down the overall cost of delivery, resulting in reduction of housing prices,” said Alok Saraf, Associate Partner, Grant Thornton Advisory Pvt Ltd.

Boost to Affordable Housing

The Union Budget, however, succeeded in giving some boost to affordable housing.

“Due to Covid, demand for large homes in the mid and luxury segments had increased in the recent past and it is expected that demand for such ready-to-move-in houses will continue to be there, leading to a steady increase in their prices. Further, work from anywhere is being adopted at a fast pace and demand for affordable houses with ticket size below Rs 45 lakh will be expected to rise in Tier 2 and 3 cities/towns, leading to increase in prices in those geographies. The extension of income tax benefit by one more year for affordable housing for both developers and buyers will further support the demand for affordable housing,” Saraf added.

Developers also welcomed the budget announcements for affordable housing.

Here’s what they said:

Mohit Goel, CEO, Omaxe Ltd, said, “State capitals and tier 2/3 cities will benefit immensely from the government’s focus on sectors like roads and highways, ports, power, urban infrastructure, railways. Add to it, the affordable housing boost, by extending tax holiday for such projects by one year, extending by one year the deadline for first-time homebuyers to avail additional Rs 1,50,000 interest deduction on home loan, and tax exemption for affordable rental housing will further boost demand for housing in these cities.”

Santosh Agarwal, CFO and Executive Director, AlphaCorp, said, “Seeing affordable housing as the fastest-growing sector, the government has announced the extension of one year till 31st March 2022 the additional deduction of Rs 1.5 lakh on sanctioned loans. This will increase and provide a much-needed impetus to the housing demand and encourage prospective buyers to avail more benefits and invest in real estate. The emphasis given on urban infrastructural development through the expansion of the metro rail network will help in seamless connectivity in Tier-II cities. Also, other announcements like RRTS, freight corridors will give boost to the realty sector.”

Mukul Bansal, Director, Motia Group, said, “The Union Budget 2021 has provided policy impetus aimed at achieving the vision of ‘Housing for All by 2022’ through measures such as extension of tax relief for the affordable housing segment. The increase in safe harbor limit for primary sale of residential units from 10% to 20% is another positive. It would have been great if the government could have increased the ambit of affordable housing. Nevertheless, the slew of measures announced to ease the availability of finance, push infrastructure buildup and enable resolution of stressed assets are going to have a positive rub-off on the real estate sector.”

Uddhav Poddar, MD Bhumika Group, observed, “It is heartening to see the government’s focus towards ‘Housing for All” and accordingly, the government has made announcements regarding affordable housing such as to extend eligibility of erstwhile tax sop on home loans up to FY22 and offer tax exemption for notified affordable rental housing projects. We too are planning to enter the affordable housing segment this year.”

Yash Miglani, MD, Migsun Group, said, “The budget announcement by the Finance Minister are indeed progressive and will help the industry in many ways. The affordable homes market has the potential to take care of the housing problem of the citizens of the country to a large extent. The real estate industry is at the cusp of transition and the twin announcements by the FM on rental housing and affordable housing both will provide a lot of support to the sector at this juncture.”

Amarjit Bakshi, CMD, Central Park, said, “Apart from social security benefits to faster tax resolutions, the budget has focused on opening new investment avenues in the real estate sector, which is the need of the hour. Tax reliefs and announcement of one year tax holiday will bring back confidence in home-buyers and boost the affordable housing sector. Change in double taxation on NRIs will also act as a catalyst for investment in this sector. The country is on its road to recovery and to ensure this, connecting unorganized labour sector through a portal, emphasis on improving quality of education through NEP, push to digital India, better connectivity, budgetary allocations for Covid vaccines are welcome steps.”

“The Cabinet has proposed extension of deduction of interest on loan for individuals on purchase of affordable housing, apart from giving a tax holiday for affordable housing projects till 31 March 2022, which will boost demand in this segment. It is a good step for affordable housing because profit gained from construction of 60 sq mt and 90 sq mt units in metro and non metro cities are eligible for tax exemption. This year we were expecting industry status and single window clearance for real estate. The government has reduced some duties (custom and anti dumping) on export of steel and this can make steel competitive for domestic segment. Hence the price of steel may come down and help control the project cost, ” said Subodh Goel, Secretary, CREDAI Western UP & MD, Civitech Group.


The Budget proposal to make dividend payments to REIT (estate investment trusts) and Infrastructure investment trusts exempt from TDS this year is another great move as it will be helpful in addressing the liquidity situation in the real estate industry.

“Debt Financing of InVITs and REITs by Foreign Portfolio Investors has been enabled by suggesting amendments in the relevant legislations. This is likely to ease access of finance to InVITS and REITs, thus augmenting funds for the infrastructure and real estate sector,” said Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE.

Anuj Kumar Garg, Vice President-Customer Engagement & Distribution, Viridian RED, said, “The Union Budget 2021 highlighted the government’s major thrust on infrastructure and manufacturing besides healthcare being the topmost priority. From the number of steps proposed to support the MSME sector to set up textile parks, the budget stressed strengthening domestic manufacturing. The government’s focus on infrastructural development and dedicated freight corridors would establish seamless connectivity, further augmenting the manufacturing setup in the country. With the aim of drawing more investment, the Budget proposed additional tax incentives for the companies relocating foreign funds to the GIFT city, which is a laudable decision in the making of GIFT City a global financial hub. Also, the debt financing of InvITs and REITs is an appreciative move as it will enable the real estate and infrastructure sector to attract more investments. From the employment generation to push real estate demand, these initiatives are likely to bring the economic multiplier effect, which is the need of the hour.”

Ashish Bhutani, MD, Bhutani Infra, said, “It is to be seen what kind of easing the government will carry out in InvITs/REITs. Hopefully, there will be changes in the mandated time gap between two institutional placements, and changes will be made with respect to pricing of units by REITs and InvITs for preferential issues. In view of the pandemic, we expect that there will be relaxations for raising of equity capital. Having said that, we hope that the relaxations will be good for the market, and people will see more REITs moving in.”

Akshay Taneja, MD, TDI Infratech, said, “The Union Budget 2021-22 was long awaited by the real estate sector, as it could have led to a serious turn of events while the country’s economy is still recovering from the brunt of lockdown. However, instead of going the direct way, the FM has chosen to initiate stimulus in the related infrastructure sector, which will be bringing job opportunities to the construction workers and laborers who had suffered last year due to complete shutdown. Commercial properties seem to interest a large magnitude of people, especially after the global pandemic, as they want to have an extra source of income. It is good news that the real estate has emerged as one of the safest investment options; with easing of InvITs/REITs, the sector is set to benefit further.”