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The Union Budget 2023 has several positive proposals for the real estate and infrastructure sector, which will help increase private investment, create job opportunities, and make cities sustainable and efficient. The budget will help boost the affordable housing sector, promote green growth initiatives, and incentivize cities to promote urban development.
Pradhan Mantri Awas Yojana (PMAY) has been a major focus of the Budget 2023, with the outlay being enhanced by 66% to over INR 79,000 crore. This will help boost the affordable housing sector and create job opportunities in the related industries. The budget has also proposed changes in the provisions for computing capital gains in the case of joint development of property, which will help to reduce ambiguity in the tax treatment of such transactions. Additionally, the interest paid on borrowed capital for acquiring or improving a property can be claimed as a deduction from income and can also be included in the cost of acquisition or improvement on transfer, reducing capital gains.
The Budget 2023 also focuses on promoting green growth initiatives, such as green buildings, green energy, green mobility, and green farming. These efforts will help reduce the carbon intensity of the economy and create green job opportunities. The government has proposed to exempt development authorities from income tax, which will help them better focus on their core objectives of planning, development and improvement of cities, towns, and villages.
This year’s budget aims to make cities ready for municipal bonds through property tax governance reforms and ring-fencing user charges on urban infrastructure. This will incentivize cities to improve their creditworthiness and increase the availability of funding for urban infrastructure development. The budget proposes to establish an Urban Infrastructure Development Fund (UIDF) which will be managed by the National Housing Bank and used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. The government has made INR 10,000 crore per annum available for this purpose.
The newly established Infrastructure Finance Secretariat will assist stakeholders in increasing private investment in infrastructure, including railways, roads, urban infrastructure, and power, which are predominantly dependent on public resources. The government has also proposed amendments in the classification of non-banking financial companies by the Reserve Bank of India (RBI) to align with the same. The budget proposes to encourage states and cities to undertake urban planning reforms and make cities sustainable and efficient with efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, and affordability of urban land.
Non-Resident Indians (NRIs) will also benefit from the budget proposals, with the time period for filing of appeal against the order of the adjudicating authority under Benami Act being amended to 45 days from the date of receipt. The Benami Transactions (Prohibition) Act, 1988, is an Indian law aimed at prohibiting illegal and undisclosed transactions made in a fictitious name, commonly known as benami transactions. The act provides for the prohibition of benami transactions and the right to recover property held benami. The act also provides for the imposition of fines and imprisonment for violations of its provisions.
The definition of 'high court' has also been proposed to be modified to allow determination of jurisdiction for filing appeal in the case of non-residents. The budget also proposes a time limit for Special Economic Zone (SEZ) units to bring the proceeds from exports of goods or services into India and makes filing of income-tax return mandatory for claiming deduction on export income.
To enhance business activities in the Gujarat International Finance Tec-City (GIFT IFSC), the government has proposed delegating powers under the SEZ Act to IFSCA to avoid dual regulation, setting up a single window IT system for registration and approval from various regulatory bodies, permitting acquisition financing by IFSC Banking Units of foreign banks, establishing a subsidiary of the Export-Import Bank of India for trade re-financing, and amending the IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act.
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