The government on Monday extended the additional tax deduction of Rs 1.5 lakh on interest paid on housing loan for the purchase of affordable homes by one more year to March 31, 2022, a move aimed at boosting demand in the sluggish real estate sector.
The additional deduction of Rs 1.5 lakh over and above Rs 2 lakh was introduced in the 2019 budget. This was allowed for those buying homes for the first time and of up to Rs 45 lakh.
“I propose to extend the eligibility of this deduction by one more year, to 31st March 2022,” Sitharaman said in her speech, adding that the government saw ‘Housing for All’ and affordable housing as priority areas,” Sitharaman said in her Budget speech.
“The proposals for the annual budget reinforce the Government’s focus on affordable housing. For the home buyer, the second extension of the deadline till 31 March 2022 for the additional Rs1.5 lakh tax deduction given on loans taken to buy a house in an affordable housing project is welcome, as is the developer whose affordable housing projects also get an extension for tax benefits, for projects completed till March 31, 2022.
Similarly, tax exemption for notified affordable housing for migrant workers, and the deduction on payment of interest for affordable housing being extended by a year will give a fillip to this emerging segment. As affordable housing attracts only 1% GST and Rs 1000 stamp duty in the state of Maharashtra will augment the production of affordable housing in the state”, said Dr Niranjan Hiranandani, National President, NAREDCO and MD, Hiranandani Group
“The proposal to extend the Rs 1.5 lakh benefit on interest paid on affordable housing loans by one year to March 31, 2022, is an exceptional move which will boost the affordable housing segment and help to achieve the Prime Minister’s vision of Housing for All. It will also ensure that more and more homebuyers get to avail of this benefit”, said Mr Ashok Mohanani – President, NAREDCO Maharashtra.
“While affordable housing continued to remain a priority area for the government with few additional reforms, the government could have given a further boost to real estate which fuels the Indian economy as it is the second-largest employer after agriculture and supports over 250-allied industries. Overall, while the social sector has received good support and is welcome, we are convinced that the government will do its best to get the economy to bounce back, and sustain long term growth of the real estate sector too with substantial measures in the near future”, said Mr Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani
“Overall there were no specific announcements to boost the ailing real estate sector, other than the extension of incentives for interest payment on affordable homes by another year, tax incentives for notified affordable rental housing and some tax relief for dividends received from REITS. The sector needs to be nurtured in-toto for its contribution to GDP specifically, but more importantly, for being a necessary input in all economic activities”, said Mr Sankey Prasad, FRICS, Chairman & MD (India), Colliers International
“Some of the proposed laudable steps related to the housing segment will certainly give a fillip to the buyers of affordable homes as the time period of taking loans to buy such homes have been increased by another year i.e. – till March 31, 2022. This will help consumers to continue to avail additional tax benefits of Rs. 1.5 lakh u/s 80EEA of the Income Tax Act for another year. By extending the period by one more year, the Government has clearly indicated its emphasis for the affordable segment of housing”, said Mr J C Sharma, Vice Chairman & Managing Director SOBHA Ltd.
“The Government’s measures in 2020 have only provided some relief. The budget provided an opportunity to consider lowering GST on building materials, no GST on JDA and TDR, extended the tax benefit from affordable to mid housing would have made a significant impact”, said Mr Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited.
“The real estate industry appreciates the fact that FM extended the interest deduction for home buyers and the tax holiday for affordable housing projects (both by a year) which should also catalyse more growth. Additionally, to provide for housing for migrant workers, the FM proposed tax exemption for notified Affordable Rental Housing Projects. Details on this tax exemption are awaited”, said Mr Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE
“The sector looks at the financial inflow to get under-construction projects towards which the budget has given tax holidays, tax exemptions and an additional deduction of interest on the home loan. This gives a dynamic push towards affordable housing and will foster demand for it”, said Mr Amit Goenka, MD & CEO at Nisus Finance.
“For affordable housing, the extension on deduction on payment of interest by one more year will help in offering the much-needed convenience for the home buyer. Affordable housing tax holiday extension up to March 2022 will boost the recent momentum in housing demand. The single registration system for migrant workers is a positive aspect for companies to reduce the hassle and focus on larger development” said Mr Rohit Poddar, Managing Director, Poddar Housing and Development Ltd and Joint Secretary, NAREDCO Maharashtra
“Budget 2021 again highlighted the government’s resolve towards promoting ‘housing for all’. Measures such as the one-year extension of the Rs 1.5 lakh deduction on payment of interest for affordable housing and on the tax holiday for affordable projects brings in much needed relief for the buyers as well as the developers”, said Piyush Bothra, CFO, Square Yards
“An extension of tax exemption available for the purchase of affordable houses and affordable rental housing projects will boost the real estate sector in major cities and Tier II and III cities as well”, said Mr Farshid Cooper, MD, Spenta Corporation
“Real estate sector needs the support of the government wants every Indian to have a house. Escalating costs and delays are the biggest hurdles; government must step in through income tax incentives, to the developers, rightly priced land, availability of land in major cities for affordable housing, and so on. The list of expectations is endless because the goal is large – to provide houses to everyone in the budget that they can afford and still not compromise on the amenities or the deadlines given to the buyers”, says Mr Achal Raina, COO, Raheja Developers.