How Does Union Budget 2023 Impact Real Estate, Infra?

In the 2023 Budget speech finance minister, shared details that show an indirect push towards infra and real estate sector. Here are the major reforms.

Pradhan Mantri Awas Yojana update

The outlay for PM Awas Yojana is being enhanced by 66 per cent to over Rs 79,000 crore.

Benefit of investing proceeds in property
Capital gains can be avoided by investing proceeds of such gains in residential property. This is proposed to be capped at Rs 10 crore under sections 54 and 54F.

Amend provisions
- For computing capital gains in case of joint development of property to include the amount received through cheque etc. as consideration.

- It is proposed to amend section 132 of the Act, search and seizure, to allow the authorised officer to take assistance of specific domain experts to aid in accurate estimation of undisclosed income held in the form of property by the assessee.

Property acquisition
- While interest paid on borrowed capital for acquiring or improving a property can, subject to certain conditions, be claimed as deduction from income, it can also be included in the cost of acquisition or improvement on transfer, thereby reducing capital gains. It is proposed to provide that the cost of acquisition or improvement shall not include the amount of interest claimed earlier as deduction.

- There are certain assets like intangible assets or rights for which no consideration has been paid for acquisition and the transfer of which may result in generation of income. Their cost of acquisition is proposed to be defined to be NIL.

Exemption to development authorities etc.
- It is proposed to provide exemption to any income arising to a body or authority or board or trust or commission, (not being a company) which has been established or constituted by or under a Central or State Act with the purposes of satisfying the need for housing or for planning, development or improvement of cities, towns and villages or for regulating any activity or matter, irrespective of whether it is carrying out commercial activity.

Investment boost to Infrastructure
- The newly established Infrastructure Finance Secretariat will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure and power, which are predominantly ependent on public resources.

- Continuation of the 50-year interest free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs 1.3 lakh crore.

- The Harmonized Master List of Infrastructure will be reviewed by an expert committee for recommending the classification and financing framework suitable for Amrit Kaal.

Railways, transport and logistics
- A capital outlay of Rs 2.40 lakh crore has been provided for the Railways. This highest ever outlay is about 9 times the outlay made in 2013- 14.

- One hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified. They will be taken up on priority with investment of Rs 75,000 crore, including Rs 15,000 crore from private sources.

- Fifty additional airports, heliports, water aerodromes and advance landing grounds will be revived for improving regional air connectivity.

Urban development
- States and cities will be encouraged to undertake urban planning reforms and actions to transform our cities into 'sustainable cities of tomorrow'

- Through property tax governance reforms and ring-fencing user charges on urban infrastructure, cities will be incentivized to improve their credit worthiness for municipal bonds.

- Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfall. This will be managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF. Government expects to make available Rs 10,000 crore per annum for this purpose.

- A higher limit of Rs 3 crore for TDS on cash withdrawal is being provided to co-operative societies.

Benami Act
- It is proposed to amend the time period for filing of appeal against the order of the Adjudicating authority under Benami Act within a period of 45 days from the date when such order is received by the Initiating Officer or the aggrieved person. The definition of 'High Court' is also proposed to be modified to allow determination of jurisdiction for filing appeal in the case of non residents.

Special Economic Zones(SEZ)
- It is proposed to provide a time limit for an SEZ unit to bring the proceeds from exports of goods or services into India. The filing of income-tax return is also proposed to be made mandatory for
claiming deduction on export income.

GIFT IFSC
- To enhance business activities in GIFT IFSC, delegation of powers under the SEZ Act to IFSCA to avoid dual regulation will be done. A single IT system window for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI willbe set up

Also, will permit acquisition financing by IFSC Banking Units of foreign banks, establish a subsidiary of EXIM Bank for trade re-financing.

- Amend IFSCA Act for statutory provisions for arbitration, ancillary services, and avoid dual regulation under SEZ Act

- Recognize offshore derivative instruments as valid contracts and for countries looking for digital continuity solutions, government will facilitate setting up of their Data Embassies in GIFT IFSC.