Budget21:FM extends additional Rs 1.5 lakh tax deduction on home loan int, supports rental housing proj
New Delhi: The additional Rs 1.5 lakh tax deduction on the home loan interest has now been extended till 31 March 2022 by the government. The announcement was made my Finance Minister Niramala Sitharaman today while presenting the Budget 2021, and the move can be see as a step to achieve the government’s aim of ‘Housing For All by 2022’. She also proposed tax holiday for one more year, till 31 March 2022, for affordable housing real estate projects.
This additional tax deduction was first announced by Sitharaman in July 219 and has been able to give a big boost to the affordable category of housing industry.
The Minister also said there will be exemption for notified affordable rental projects from tax. The step will provide support to the rental housing market, especially those places which see huge influx of migrant workers.
"The benefits for affordable housing in terms of exemptions is a welcome move and is likely to give this segment a boost. The recapitalisation of Public Sector Banks will give a shot in the arm to lending activities and boost expansion in business activities and consumer spending," said V Swaminathan, CEO Andromeda & Apnapaisa.
"Setting up of an ARC cum AMC for bad loans along with the decision to privatize a couple of public sector banks were much awaited. These measures will mean higher funding from banks. NBFC sector, which is facing a cash crunch, certainly stands to benefit from it" said Deepak Aggarwal, Co-Founder, Moneyboxx Finance Ltd.
"This is definitely a good budget - focused on the short-term growth in the right areas without any disruptive taxation in these extraordinary times. Affordable housing incentive extended by one more year and No change in definition of affordable housing are some of the things i especailly liked," said Sanjeev Govila, CEO, Hum Fauji Initiatives.
"The support announced today by the Honourable Finance Minister 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 CEO, Housing.com, Makaan.com and Proptiger.com
"The affordable housing boost, by extending tax holiday for such projects by one year, extending by one year the deadline for first time homebuyers to avail additional Rs 1,50,000 interest deduction on home loan and tax exemption for affordable rental housing, will further boost demand for housing in these cities," said Mohit Goel, CEO, Omaxe Ltd.
"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" said Ankit Kansal, Founder and MD, 360 Realtors.
"There has been a prioritisation of Affordable housing segment. Now we are also looking forward to Introduction of a bill to set-up a development finance institution, and await the finer-print on utilization of Rs 20,000 crore capitalisation," said Amit Modi, Director, ABA Corp & President (Elect), CREDAI - Western UP.
“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. The enhanced spending on public infrastructure projects like ports, railways, airports, warehousing, gas pipelines, metro, economic corridors is laudable,” said Niranjan Hiranandani, National President NAREDCO.
“Positives for the real estate sector include extension of Rs 1.5 lakh additional deduction by 1 more year for affordable housing, tax holiday for affordable housing extended by one more year and new tax incentives for affordable rental housing for migrant workers. Negatives include no mention of allowing 100% FDI in completed residential projects, no announcement of more funds under SWAMIH, no concrete steps to increase disposable income of homebuyers, no mention of setting up of a single window clearance system for approvals, not allowing GST input tax credit for under construction projects, no reduction in GST on building materials, not incentivising state governments to rationalise stamp duty and no concrete announcement with regards to making more credit available for the real estate sector,” said Ramesh Nair, real estate industry veteran and former CEO of JLL.
“As far as the real estate sector is concerned, clearly the government’s focus in Budget 2021 has been on ensuring increased liquidity for all stakeholders in the short and long term. Budget 2021 again highlighted the government’s resolve towards promoting ‘housing for all,’ said Piyush Bothra, CFO, Square Yards.
“The decision of not to deduct TDS on REITs and InVITs is a welcome move for the real estate industry, particularly the commercial category. It will help attract investment in commercial real estate assets and thereby will help boost the demand for A-grade office spaces across the country especially in the bigger cities, which are hubs of employment activities,” said Sahil Vachani, MD & CEO, Max Ventures & Industries (MaxVIL).
"We can see the Government’s focus on affordable housing. The deduction on payment of interest for affordable housing has been extended by a year. This move will improve customer buying behavior,” said Aditya Kushwaha, CEO & Director, Axis Ecorp.
“Seeing affordable housing as the fastest growing sector, the government has announced the extension of one year till 31st March 2022 on the additional deduction of Rs 1.5 lakhs on the sanctioned loans. This will increase and provide a much-needed impetus to the housing demand and encourage prospective buyers to avail more benefits and invest in real estate,” said Mukul Bansal, Director, Motia Group.
“No TDS on REITs will potentially help the real estate sector in increasing the liquidity and cash flow. Giving relief to NRIs from double taxation will give a sentiment boost to the real estate sector,” said Rohit Poddar, Managing Director, Poddar Housing and Development Ltd. And Joint Secretary, NAREDCO Maharashtra.