The Union Budget proposal to increase the deduction limit for interest on housing loan from Rs. 1.5 lakh to Rs. 2 lakh for self-occupied houses is likely to give a boost to the housing sector.
While real estate circles are yet to perceive the projected growth in demand for houses, chartered accountants say that one can at least save Rs. 5,000 per annum in income tax. S.M. Arshad, Managing Director of Mohtisham Complexes, one of the leading builders in Mangalore, said the sector was yet to estimate the anticipated growth.
K.S. Sreedhara Mruthy, a Bangalore-based Chartered Accountant, said an individual in the 10 per cent tax bracket could save Rs. 5,000 with this increase in the deduction. With this, many more people were likely to opt for housing loans, he said. Meanwhile, Mr. Arshad regretted that the Union government did not consider the demand by Confederation of Real Estate Developers’ Association of India (CREDAI) to accord industry status to the housing sector. Only the affordable housing sector had been given this status, he said. Mr. Arshad noted that the housing sector employed a large number of people and an industry status would have given the sector an impetus.
Anuj Puri, Chairman and Country Head, Jones Lang LaSalle, in a statement said the budget had also given indirect benefits for the housing sector by increasing the individual income tax exemption limit from Rs. 2 lakh to Rs. 2.5 lakh. This will increase disposable income of individuals and would have further implications on their ability to service home loans, he said.
