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Impact of Union Budget 2024 on the Real Estate Sector: GST Reforms and GST Tax Implications

Posted on 02 Feb, 2024

The real estate sector is looking forward to the upcoming budget announcement, with expectations for measures geared towards economic growth and driving economic advancement within the nation.

Impact of Union Budget 2024

Finance Minister Nirmala Sitharaman is all set to show an interim Union budget 2024 on February 1, coinciding with the Lok Sabha elections slated for April-May. After the elections, the new government will present a comprehensive budget for the fiscal year 2024-25 (Union Budget 2024) following the Lok Sabha elections.

The Union Budget 2024 is anticipated to handle a variety of financial indicators, including inflation, fiscal deficit, capital expenditure, revenue receipts, bad loans, and more.

In 2023, the Indian real estate market experienced unparalleled growth, surpassing all expectations and achieving new records. As the market prepares for 2024, indications suggest a continuation of this robust growth phase, which will further fortify the nation's economy and inspire confidence among investors.

The upcoming Union Budget 2024 sets the anticipations high for the real estate sector. Various developer societies communicate their desire list for the government to look into it.

Despite global economic uncertainties, the sector has shown remarkable resilience and is expected to foster growth through favorable government policies in the year 2023-24 and expect more highs from Union Budget 2024 for the year 2024-25.

The real estate sector eagerly awaits the upcoming budget announcement, with hopes that it will introduce measures to support growth and stimulate the nation's economy. The government must take proactive measures such as simplifying clearances, providing fiscal incentives, granting industry status, and implementing other supportive initiatives to promote growth effectively.

The annual budget in India is presented by the finance minister on February 1 each year, following approval from the President for its presentation.

The finance minister will deliver the budget speech, outlining the government's revenue generation and expenditure plans for the upcoming fiscal year.
It covers various sectors, including health, education, and infrastructure. The Union Budget 2024 aims to achieve economic growth, and fiscal discipline, and address the country's financial priorities
Like the previous three full Union Budgets, this year's Interim Union Budget 2024 will also be delivered in paperless form.

Stamp Duty Reduction for Property Registration

One of the significant expenditures associated with buying a home is the stamp duty, which must be paid for property transfers. It is a tax imposed by the state government on property acquisition or transfer, usually shouldered by the purchaser. Regardless, several state governments offer reduced stamp duty rates if the homebuyer is a woman or a joint owner of the property.

For instance, in Delhi, the stamp duty rate stands at 4 percent for female homebuyers, 6 percent for male homebuyers, and 5 percent for joint ownership (male and female). In contrast, certain states, like Jharkhand, have minimal stamp duty, with male homebuyers paying 7 percent, while female homebuyers are required to pay a nominal Rs 1.

Interim Union Budget 2024: Here are several key financial terms you should know:

Economic Survey
The finance minister unveils the Economic Survey one day before the Union Budget presentation. The Economic Survey presents an overview of economic performance and key macroeconomic indicators.

Annual Financial Statement
Article 112 of India's Constitution mandates the central government to present to Parliament an annual financial statement detailing estimated receipts and expenditures for each fiscal year. Typically, this document is divided into three sections: the Consolidated Fund, Contingency Fund, and Public Account.

Inflation
Inflation refers to the rate at which goods and services within an economy rise over time. As inflation rises, it erodes the value of the country's currency and diminishes purchasing power.

Divestment
Divestment involves selling existing assets, while capital expenditure (capex) refers to government spending on acquiring, maintaining, or upgrading physical assets. Customs duty is a tax imposed on imported or exported goods, whereas the Goods and Services Tax (GST) is managed by the GST Council and is not part of the budget.

Revenue Deficit
A revenue deficit occurs when the government's net income falls short of anticipations, whereas a revenue surplus accomplishes the opposite. Plan and non-plan expenditures include budget estimations derived from stakeholder discussions, with non-plan expenses concerning significant government budgetary spending, such as debt servicing, defense, and interest payments.

Fiscal Deficit
The fiscal deficit represents the variance between the government's total expenditures and its revenue receipts over a fiscal year. To close this gap, the government has executed several measures, including borrowing funds from the Reserve Bank of India (RBI).

Gross Domestic Product (GDP)
GDP, one of the most commonly used macroeconomic indicators, is a useful tool for estimating an economy's performance. It is the total value of a country's domestically produced buyer goods and services over a given period.

Tax regime
The Income Tax authority specifies tax slabs and rates. In fiscal year 2020-21, the finance minister presented an optional simplified income tax regime known as the New Tax Regime. In the New Tax Regime, the government reduced tax rates for various income levels.