With the government's aim to provide affordable housing to the urban poor by 2022, Finance Minister Nirmala Sitharaman in this year's Budget has extended the eligibility for availing an additional deduction of interest. The current exemption of additional interest of up to Rs 1.5 lakh for loan taken to purchase an affordable house has been extended by one more year. This means the additional deduction of Rs 1.5 lakh will also be applicable to all housing loans taken up till March 31, 2022, for the purchase of an affordable house. Also in order to improve the supply of affordable houses, realty players can avail the tax holiday for one more year. The new tax exemption for the notified Affordable Rental Housing Projects has also been proposed. The real estate industry has welcomed the initiatives by the government.
"The announcement of tax holiday for the affordable housing developers for one more year for developing affordable rental housing projects as a part of the Pradhan Mantri Gareeb Awas Yojana - Urban to ensure affordable housing for the migrant workers is admirable," said J C Sharma, Vice Chairman & Managing Director SOBHA Ltd.
While the tax sops is expected to generate more demand, especially among first-time buyers who generally fall in the lower and mid-income segments, "The extension of the tax holiday on affordable housing projects for developers by another year will increase the project launches in this segment as they would get additional time and resources. Apart from this, the mega infrastructure development and upgradation to be undertaken across India will add much value to the real estate sector," said Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd.
Affordable housing already accounts for more than 35 per cent of the supply across the top 7 cities in the country and 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. "Customs duty on steel reduced to 7.5 per cent will create some space to real estate developers who may not be in a position to increase prices immediately," he added.
Additionally the Finance Minister had also assured of making amendments to legislations to further help securing Debt Financing of InVITs and REITs by foreign portfolio investors (FPIs). The proposed easing of restrictions could help in Indian markets seeing more listings. "Proposing to make dividend payments to REIT (real estate investment trusts) and infrastructure investment trusts exempt from TDS this year is another great move as it will be helpful in addressing the liquidity situation in the real estate industry," said Anshuman Magazine , CEO - India & South Asia, CBRE.
However the sector is hoping for more in coming days , with many of the key concerns still having not been addressed in the Budget.
"There have been many pressing concerns in the real sector that have not been addressed such as easing liquidity, reduction in levies/taxes, tax deductions on home loans to give impetus to buyer sentiment, granting of industry status to the overall real estate sector and implementation of single window clearance amongst others," said Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani.
On the longstanding demand of rationalising the GST rates by allowing input tax credit not getting a mention, "We are hopeful that recommendations from the real estate sector will be addressed as soon as possible, especially with regard to lowering GST on cement and reinstatement of input tax credit," said Pavitra Shankar, Executive Director, Brigade Enterprises Ltd.