Indian budget gives a boost for promoting affordable housing

V Nagarajan

At a time when the country is slowly recovering from the adverse impact of pandemic, finance minister Nirmala Sitharaman’s budget for 2022-23 lays much emphasis on elevated public capex which would herald a new era of investment and generate opportunities on multiple fronts.  

The budget has given a boost for promoting affordable housing for middle class and economically weaker sections in urban areas.  In 2022-23, 80 lakh houses will be completed for the identified eligible beneficiaries of PM Awas Jojana, both rural and urban in one year.  A sum of Rs 48,000 crore has been allocated for this purpose.  Allocation of more funds for infrastructure will create more job opportunities which in turn will push demand for housing.

The total effective Capex spend by the government will be Rs10.7 lakh crore would improve connectivity and logistics infrastructures of the country.

It has been felt necessary to leverage the SEZ legislation by making it available for domestic economic activities as well.    A unique land parcel identification number for digital land records management to bring in more transparency in real estate transactions has been proposed in the budget.   Steps are being taken for the translation of land records from regional languages.  The ‘anywhere registration’ of deeds and documents under the ‘One nation One-registration software’ could be a game changer for real estate sector in India.

The budget has granted infrastructure status to data centres. The access to availability of cheaper and long-term institutional funding is a welcome move.  It is said that the data centre industry capacity is expected to double in 2023.  Increasing optic fiber network and 5G spectrum allocation this year would lead to a higher digital push which in turn will push the real estate demand.

There are certain inherent advantages for commercial sector with the start up policy announced in the budget.  The period of incorporation has been extended upto March 2023 for availing tax benefits.  Colliers India estimates confirm that during 2021, start-ups alone leased about 2.2 million sqft of commercial space, in the top three cities of Delhi-NCR, Mumbai and Bengaluru.  Around 14,000 start-ups were recognised during the financial year 2022, with about 555 districts in India having at least one new startup.

The budget has given a boost to urban planning in tier 2 and 3 cities.  This involves an overhaul of building laws and development of transit-oriented corridors with an intent for building urban capacity.  The government will offer interest-free loans to state governments.  Five centres of excellence have been mooted for urban planning, which will offer the sector a medium to hire trained professionals.  A high level committee will be formed to recommend urban planning policies, implementation plans, capacity building and governance.

On the flip side, the real estate sector’s long-term demand of giving industry status to enable developers to obtain low cost funding for projects has not yet been met.  This is so in spite of the fact that 262 ancillary industries are dependent on real estate sector.  As per the government of India, the construction sector contributes 9 pc of the GDP and employs 44 million workers, becoming the second-largest employer in India in 2017.

I have agreed to transfer a portion of my land for the public purposes and the local authorities are compensating it by way of issuing TDR.  Is TDR transferable?  Santosh Rane, Sharjah.    

TDR is a way of remunerating the party sacrificing some immovable property for a public cause in specified cities.  The local authority will provide a valuable consideration in kind.  TDR has a commercial value.  It is usable by the owner or the developer and transferable for consideration.

I am planning to gift immovable property in India to my relative.  What is the procedure and is gift tax applicable?  Subash Nair, Dubai.

To gift immovable property, you will have to draft the document on a stamp paper, have it attested by two witnesses and register it.  Registration of a gift deed with the sub-registrar of assurances is mandatory.

Only gifts to non-relatives are taxable.  Among the relatives who will not be taxed on receipt of gift include your spouse, brothers and sisters of either of your parents, lineal ascendant or descendant of you or your spouse, your spouse’s siblings and their respective spouses, and in case of Hindu Undivided Family (HUF), any member belonging to the family.