The real estate sector returned nearly empty-handed from the Union budget as its pleas to increase tax exemption on home loan interest component and long term capital gains from sale of property was largely ignored.

While the sector took heart from the increased allocation in capital expenditure and focus on infrastructure creation which are likely to have a rub on effect on the housing demand, there was no specific announcement for the real estate industry.

However, finance minister Nirmala Sitharaman increased allocation under PM Awas Yojana by 66 per cent to Rs 79,000 crore for 2023-24. In the last budget, the FM had allocated Rs 48,000 crore under this head, even though the government is likely to spend Rs 77,310 crore according to the revised estimate presented at the budget.

Real estate industry said the increased allocation will help in creation of lower income group housing.

“The real estate sector requested for the tax benefit on home loan interest and principal repayment , but the budget did not mention any sops on increasing the limit of home loan interest deduction on income tax returns,” Sushil Mohta, chairman of Merlin Group and president of CREDAI –West Bengal, said.

“We expected waivers or reduction of GST on raw materials like cement, steel that would have boosted the real estate segment. Moreover, the real estate sector, the second largest employer in India, did not receive the industry status which is long overdue,” he added.

Sidharth Pansari, president of Credai Bengal, pointed out that proposed changes in the capital gain tax could be a dampener.

“Deduction from capital gains on residential property investment has been capped under sections 54 and 54F at Rs 10 crore which could negatively impact high-value investment,” he added.

Harsh Patodia, president of Credai national, argued that increasing the income tax limit for the middle class will create buoyancy for homes and drive demand.