Union Budget 2022-23: It’s high time we see home buying and hence home loans leverage this through a favourable budget announcement
Indian Union Budget 2022: Real estate needs a boost. Reuters
The reason I look forward to the annual Budget is the wave of change it promises with new schemes, focus sector announcements and taxation regime changes to benefit the common man.
First up, home buying and home finance domain space has been a hot topic of discussion between experts of late. It is expected that the tax rebate on home loan principal (currently at Rs 1.5 lakh under Section 80C) might get an additional Rs 50,000 extended limit, much like how NPS is currently treated. No matter what the final extension be here, if it happens, it will be a big one. Even slight changes in tax limits can help the taxpayer move to a downwards slab and thus pay lesser overall tax and also it eases their decision of home buying if they see tangible tax savings in a year.
Extension on home loan interest rate limit
The other discussion point is if the interest limit (currently Rs 2 lakh deduction) can be extended. Now, this may be speculation or might happen but any increase in limit here will be a big change. For the first few years of a home loan, the repayment is skewed towards interest hence an extension on the taxable limit here will help the consumer pay lesser tax overall. Imagine, a consumer pain point of interest now becoming a tax SOP! Again, we cannot be sure if this is happening however the real estate bodies have been asking for this change.
In my view, this will help in fast-tracking real estate on a much-needed growth path. This sector has shown immense resilience in the past few years battling demonetisation, GST, slowdown and the biggest of them all – COVID 19. The unsold inventory volume for the top 7 cities went down by 40 percent between 2019 and 2021. This shows how the sector has adapted to macro-environment changes and sustained itself. Hence, it will be icing on the cake if 2022 can come with a tax SOP for home buyers, leading to higher home sales, favourable cash flow and growth for real estate developers.
SOPs for affordable housing
We expect some SOPs for the affordable housing sector. Any tax regime or policy changes that can benefit the affordable buyers and/or the salaried class has been known to usher in a growth era. It’s high time we see home buying and hence home loans leverage this through a favourable budget announcement. Blame the optimist in me, but it’s time for home loans to enable home buying and I shall have my fingers crossed for a relevant announcement in this Budget.
As for the fintech sector in general, I believe a lot of policy relaxations by the government as well as RBI has helped the space in the past two years. For example, moves like video-KYC enabled the era of digital home loans in 2020. Hence, I believe fintech is already on the highway of growth.
Identify fintech as a focus sector
My expectation and a wish list would be to see fintech being called out as a focus sector. We all know how identifying agriculture or SMEs or startups as a focused area in a budget has tailwind effects across the value chain. Fintech has been called out positively by the RBI and leading PSU banks in the past. It has been a prolific growth story of digital India. Hence, any regulatory move in that direction will go a long way in consummating the transformation that fintech has already started bringing in our financial habits.
All in all, I expect this Budget to be accretive towards real estate, Fintech, start-ups and in a way chalk out a growth roadmap for how ‘Digital India’ can take over the growth story.
The author is CEO & Co-Founder, Easiloan-fintech startup.
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