Continuing with its focus on affordable housing, the government today extended benefits of availing an additional Rs 1.5 lakh tax deduction on home loan interest till 31 March 2022. The move is aimed at fulfilling Prime Minister's Narendra Modi's vision of 'Housing For All" by 2022 and will provide a huge impetus to the residential real estate sector. "This Government sees 'Housing for All' and affordable housing as priority areas," said Finance Minister Nirmala Sitharam while presenting the Union Budget.
Considering the present scenario wherein challenges are faced by the migrant workers to find suitable accommodation in metros and other large cities, Sitharaman also proposed to allow new tax exemption for notified Affordable Rental Housing Projects. "The government is committed to provide affordable rental housing for migrant workers," she said.
"In Real Estate sector, Affordable Housing is set to get boost from the tax holiday being extended for one more year till March 31, 2022 and Rs1.5 lakh for interest paid on loans to purchase an affordable house being extended another year. The demand for affordable housing is at an all time high, and we will focus on fulfilling it. we will keep contributing to PM Shri Narendra Modi's mission of 'Housing For All'. The focus of the government on infrastructural development and MSMEs will lead to job creation, which will help people get financially stable. Looking at the experience of people in last one year, affordable housing will get more buyers as people want to secure their lives by owning a home," said Pradeep Aggarwal, Founder & Chairman - Signature Global Group & Chairman - ASSOCHAM National Council on Real Estate, Housing and Urban Development.
The sales of affordable houses have been robust in the country for quite some time now. The number of unsold affordable homes came down to 3.90 lakh units at he end of 2019 from as many as 4.52 lakh units at the end of 2018, according to a report by property portal Proptiger.com
"The budget announcement made today by the Honorable Finance Minister are indeed progressive and will help the industry in many ways. The affordable homes market has potential to take care of the housing problem of the citizens of the country to a large extent. The real estate industry is at the cusp of transition in the country and the twin announcement by the FM on rental housing and affordable housing both will provide a lot of support to the sector at this juncture. However, the government could have done more to alleviate the some if the pandemic inflicted pains for the industry which is unfortunately missing. The pandemic has dealt a heavy blow to the industry and any short-term easy financing solution for the developers could have made the deal sweeter," said Yash Miglani, MD, Migsun Group.
The migrant workers have been facing some issues in finding the right kind of accommodation at decent payouts in big cities but the Budget announcement today will a long way in addressing those issues.
"Government's focus and commitment for the real estate industry can clearly be gauged for the announcement made by the Finance Minister Niramala Sitharaman today. The affordable housing has emerged as important segment of the realty industry and FM has rightly address the biggest concern of the developers and buyers of such projects. Even the rental housing design of the government will solve the problem of residences for migrant workers to a great extent. The push to infrastructure will also benefit the real estate industry indirectly as better infrastructure in the country will help in real estate projects spreading out of compact city limits. A little bit of clarity on Input Tax Credit would have made the matters even better for the industry. All in all, it's a good budget for the real estate industry" said Vikas Garg, Deputy Managing Director, MRG World.
Sitharaman had first announced this additional tax deduction on home loan interest in July 2019 for all home loans availed till 31 March 2020. It was extended by her till 31 March 2021 later. The Minister today extended it till 31 March 2022, much to the cheer of the real estate industry which has been badly battered by the pandemic.
"The Budget announcement made by the Finance Minister today addresses an important problem in the real estate industry today, i.e. housing for the migrant workers. The decision to provide exemption from tax to the notified affordable rental housing projects will maximize the migrant workers to get a home of their choice in a big city at lower payment. However, the government did not address the long pending demand of the industry to expand the definition of affordable house. The present limit of Rs 45 lakhs as the price of a house to be called affordable is too small and must have been raised to Rs 75 lakhs," said Kapil Kapur, Director, Sales,Strategy & Business Development, Bullmen Realty.
Homes costing up to Rs 45 lakh are defined as affordable houses. The government had cut the GST on affordable houses to 1 percent some time ago with a view to help the segment.
"The union budget has reiterated the government's focus on Affordable Housing through concentrated policy impetus in the form of tax exemptions and tax holidays. Another good thing discussed in the budget is the multilayered support to infrastructure. The Budget has announced a host of policies and initiatives to boost urban development, enhance urban infrastructure, monetize freight corridors, upscale power generation capacity, and commence work on numerous large scale roadway & railway projects. The government has also announced huge allocations in the urban Swachh Bharat mission 2.0. These initiatives will boost the overall infrastructure, increase economic productivity, improve the livability index of urban cities alongside building real estate demand in Indian urban corridors," said Ankit Kansal, Founder & MD, 360 Realtors.