To give further push to the government’s ‘Housing for All’ goal, the Union Budget has yet again laid emphasis on affordable housing, giving a boost to the sector and home-buyers as well.
Last year, an additional deduction of up to ₹1.5 lakh for interest paid on loans taken for purchase of an affordable house was announced. The deduction was allowed on housing loans sanctioned on or before March 31, 2020.
Now, to ensure that more persons avail this benefit, the Finance Minister has proposed to extend the date of loan sanction for availing this additional deduction by one more year till March 31, 2021. Referring to the tax holiday provided on profits earned by developers of affordable housing projects approved by March 31, 2020, the Finance Minister has proposed to extend the date of approval of such projects for availing this tax holiday, by one more year.
Shishir Baijal, CMD, Knight Frank, said, “The extension of benefits for affordable housing for developers as well as home buyers is a step in the right direction. But the real estate sector was hoping that the government would come up with measures to boost housing demand. However, the removal of exemption under the new income tax regime on principal and interest for home loans would be a dampener for the sector.”
Vivek Chandy, joint managing partner, J Sagar Associates, said that the decision to extend tax benefit on affordable housing by one year would not give the industry the stimulus it had been seeking.
According to Rohit Gera, MD, Gera Developers, “The government has not provided the necessary stimulus needed boost the real estate sector. As a result, the sector will see a slow recovery, with more pain for many home-buyers and developers.”
Dr. Niranjan Hiranandani, president, Naredco, said the Budget failed to announce much-awaited economic stimulus to fuel kick-start of $5 trillion economy. “With economy in doldrums and acute slump in consumption, efforts on demand creation incentives are missing. Any fiscal measure in the sluggish real estate sector could provide a fillip,” he said.
To minimise hardships in real estate transaction, the Budget has proposed to increase the circle rate limit of 5% to 10%.
