February 01, 2023
Real Estate Budget 2023: 10 major announcements by FM Nirmala Sitharaman
Nirmala Sitharaman, the Union Finance Minister, gave the Parliament a copy of the 2023–24 Budget. During her Budget address, the Finance Minister claimed that the government had developed a number of measures that would enhance the country's real estate and infrastructure. Regarding these sectors, FM has issued the following announcements:
1. The PM Awas Yojana budget was boosted by FM by 66%, putting it above Rs 79,000 crore.
2. The FM also suggested capping the section 54 and 54F deduction from capital gains on residential property investments at Rs. 10 crore. Lowering the amount of income tax exemption available for premiums from excessively expensive insurance policies.
3. FM also advised expanding the definition of capital gains" to include funds received in the form of a check or other form of payment for calculating capital gains in joint property development scenarios.
4. Union Finance Minister Nirmala Sitharama added that while interest paid on borrowed capital for purchasing or improving real estate may, under certain circumstances, be deducted from income, it may also be included in the cost of purchase or improvement at the time of transfer, lowering capital gains. It is suggested to provide that the amount of interest previously claimed as a deduction must not be included in the cost of acquisition or upgrade.
5. FM also suggested amending the rules to incorporate the money received by check or another form of payment as consideration when computing capital gains in circumstances of joint property development.
6. By implementing property tax governance changes and ring-fencing user fees on urban infrastructure, cities will be encouraged to improve their creditworthiness for municipal bonds.
7. Similar to the RIDF, an Urban Infrastructure Development Fund (UIDF) will be created using the shortfall in financing for priority sectors, according to FM. Public agencies will use this to build urban infrastructure in Tier 2 and Tier 3 cities, and the National Housing Bank will oversee it. States will be urged to use funding from the 15th Finance Commission's grants and other programs to implement reasonable user fees while accessing the UIDF. We anticipate providing 10,000 crores annually for this purpose.
8. According to FM, the newly constituted Infrastructure Finance Secretariat would support all stakeholders in securing more private investment in infrastructure, especially in areas heavily reliant on public resources like trains, roads, urban infrastructure, and power.
9. States and towns will be pushed to make urban planning changes and take other initiatives to make their cities "sustainable cities of tomorrow." According to FM, this entails the effective use of land resources, sufficient funding for urban infrastructure, transit-oriented development, increased access to and affordability of urban land, as well as possibilities for all.
10. Regardless of whether it engages in commercial activity, it is proposed to exempt any income earned by a body, authority, board, trust, or commission that was established or constituted by or under a central or state act with the goal of meeting the need for housing, planning, developing, or improving cities, towns, or villages, or regulating any activity or matter.