Budget 2016: Cheer for first-home buyers

The cost of the house, however, should not exceed Rs. 50 lakh.

March 01, 2016 02:46 am | Updated December 04, 2021 11:04 pm IST - MUMBAI:

MYSORE-07-12-2010: Monolithic construction technology has been adopted in the construction of houses for slum dwellers under JNNUIRM at Sathagalli in Mysore. PHOTO: M.A.SRIRAM
(TO GO WITH SHANKAR BENNUR'S STORY FOR DISTRICT PLUS) - MYSORE-07-12-2010: Monolithic construction technology has been adopted in the construction of houses for slum dwellers under JNNUIRM at Sathagalli in Mysore. PHOTO: M.A.SRIRAM

(TO GO WITH SHANKAR BENNURS STORY FOR DISTRICT PLUS)

MYSORE-07-12-2010: Monolithic construction technology has been adopted in the construction of houses for slum dwellers under JNNUIRM at Sathagalli in Mysore. PHOTO: M.A.SRIRAM (TO GO WITH SHANKAR BENNUR'S STORY FOR DISTRICT PLUS) - MYSORE-07-12-2010: Monolithic construction technology has been adopted in the construction of houses for slum dwellers under JNNUIRM at Sathagalli in Mysore. PHOTO: M.A.SRIRAM (TO GO WITH SHANKAR BENNURS STORY FOR DISTRICT PLUS)

For the first-home buyers and affordable house seekers, the Union Budget has something to cheer for.

Finance Minister Arun Jaitley has announced an additional interest deduction of Rs. 50,000 a year for loans up to Rs. 35 lakh sanctioned during 2016-17 for the first-time homebuyers. The cost of the house, however, should not exceed Rs. 50 lakh.

“The additional deduction was much awaited, given the rise in the costs of housing units. This will result in improved home buying in smaller cities,” said Rajeev Talwar, CEO of DLF.

“Most first-time homebuyers in the major metros will be left out from the additional tax exemption, as it is applicable to houses worth up to Rs. 50 lakh with loans of up to Rs. 35 lakh. This would mostly benefit first-time buyers in Tier II and Tier III cities,” said Anuj Puri, chairman and country head, JLL India. “Some leeway has been given to first-time home loan borrowers, but the relief will not boost demand in the metros. That said, service tax will not be imposed on developers of affordable housing with unit sizes not exceeding 30 square metres in the larger cities and 60 square metres in the smaller cities. This is a significant plus, and in line with the government’s intention to boost affordable housing,” said Arvind Jain, managing director, Pride Group.

“The tax holidays for builders in the affordable housing segment (not exceeding 30 square metres) are welcome. However, the ceiling could have been enhanced to 50 square metres,” Srinivas Acharya, managing director, Sundaram BNP Paribas Home Finance, said.

“The three-year window for project completion could have been for a longer duration as approvals and construction take a long time,” Sanjay Dutt, Managing Director India, Cushman and Wakefield, said.

“The fact that the market took a nosedive after the budget more or less reflects the sentiment in the housing sector. However, if the RBI announces a cut in interest rates, it could help,” Kishore Pate, CMD of Amit Enterprises Housing Ltd., said.

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