Budget 2021: Cheaper homes, build more

Mumbai: Demand and supply of affordable housing is set to increase after the Union budget for FY22 proposed to extend tax holiday for such projects and additional deduction of Rs 1.5 lakh for loans taken for buying these homes until March 31, 2022.Finance minister Nirmala Seetharaman has also allowed the tax exemption for notified affordable rental housing projects.“These measures will help the affordable housing segment create demand from homebuyers, while increasing supply of such projects from developers,” said Niranjan Hiranandani, national president of National Real Estate Development Council, or Naredco, self-regulatory body of the real estate industry. “It will be a win-win for all the stakeholders including homebuyers, developers, and the government will also be able achieve the objective of ‘Housing for All’.” 80657195Property developers are expected to launch more affordable housing projects — one of the segments that have been leading demand in the housing sector over the past three years — to claim 100% tax deduction on profits from such projects.In 2019, the government had extended timeline for approval of such projects on or before March 31, 2020 and this was extended by another year in the last budget. In 2019, the government had also reduced the goods and services tax (GST) on affordable housing projects to 1%.Loan interest payment of up to Rs 2 lakh is allowed as tax deduction for all segments of housing, while the government had allowed additional Rs 1.5 lakh tax deduction for interest paid on housing loans taken for purchase of houses priced below Rs 45 lakh in tier-2, 3 and peripheral parts of metro cities by first-time home buyers.Housing loan principal repayment up to Rs 1.5 lakh is also exempted. “The extension for extra deduction of Rs 1.5 lakh will keep demand buoyant for affordable housing in 2021 as well,” said Anuj Puri, chairman of Anarock Property Consultants. “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.” Affordable housing projects are provided a deduction under Section 80IBA of the Income Tax Act. According to Anarock Research, affordable housing accounts for more than 35% of the supply across the top seven cities in the country.

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