To revive the ailing real estate sector amid a global pandemic, finance minister Nirmala Sitharaman announced a few measures in Union Budget 2021. In an order to boost growth and consumption, Sitharaman extended the tax exemption on affordable housing for a year.
“This Government sees ‘Housing for All’ and affordable housing as priority areas,” she mentioned while presenting the Budget 2021. In July 2019 Budget, the central government provided an additional income tax deduction of up to ₹1.5 lakh for home loans to purchase an affordable housing. Sitharaman extended the eligibility of this tax deduction until 31 March, 2022.
To ensure affordable housing for migrant workers, the finance minister also announced extension of tax holiday for one more year for affordable rental housing projects. In the Budget 2020, the affordable housing developers were provided with tax holiday for an year.
“As anticipated, affordable housing and rental housing got a big boost with the govt. extending the period for extra deduction of ₹1.5 lakh available for loans up to 31st March 2022. This will keep demand buoyant for affordable housing in 2021 as well. Further, the extension of the tax holiday for affordable housing projects for one more year will help bring in more new supply within this segment,” said Anuj Puri, chairman – ANAROCK Property Consultants.
“The support announced today by the FM for rental housing too will go a long way in boosting the real estate market and will ease a lot of pressure points in the rental home market. This will also help migrant workers to a great extent and will support them in remaining in metros and other big cities during times of financial hardships such as the one presented by the COVID-19 pandemic,” said Dhruv Agarwala, Group chief executive officer, Housing.com, Makaan.com and Proptiger.com.
“Customs duty on steel reduced to 7.5% will create some space to real estate developers who may not be in a position to increase prices immediately,” Puri further added.
“The proposed debt financing for REITs and InvITs, and the setting up of the Development Financial Institution for augmenting funds for infra and the real estate sector is expected to provide a major fillip to the sector, and will attract more investments in the sector,” said Agarwala
The affordable housing projects are mainly government focused real estate arena with aim to ensure housing for all. “The government’s decision to extend tax holiday for affordable housing projects by another year is a step in the right direction to realize the PM’s dream of ‘Housing For All by 2022’,” said Kaushal Agarwal, chairman, The Guardians Real Estate Advisory.
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