An Attempt to Boost Affordable Housing Sector
The new incentives announced by the finance minister on 01 Feb 2020, are set to boost affordable housing projects in the country. In the budget 2020, Finance Minister Nirmala Sitharaman proposed to extend the additional deduction of up to Rs 1.5 lakh for interest paid on loans for housing properties that cost up to Rs 45 lakh by a year till March 2021. Same goes for tax holiday for affordable housing developers, which also has been extended for a year. This when combined with the new tax slab rate changes creates much stronger ripples in the market since individuals earning up to 5 lakh would get a full tax rebate. This excess disposable income could be further used to invest in such projects which add to the benefit of the overall scheme. To further minimize hardship in the real estate transaction and to provide some relief in the segment, Finance Minister also proposed to raise the consideration value in respect to transactions in real estate if the value was 5% less than the circle rate; the difference is by default counted as income for both, buyers and sellers. The same value has now increased to 10%.
Rs 100 Lakh crore would be invested on building a better infrastructural base over the next five years. The price has been set to fulfill more than 6500 projects across various public ventures which include housing, safe drinking water, easier access to clean and affordable energy, increase the quality of healthcare for all, improvement and introduction of many educational institutes, modernizing existing railway stations, airports, bus terminals and much more.
This clearly is a step in the right direction as it encourages both developers and potential buyers of affordable housing projects. Not only this, but the scheme would also allow the government to meet its objective of providing housing for all by the end of 2022 by reviving development activities.
With citizens shifting from rural to urban areas, it gets very hectic for many to find a decent accommodation in such fast growing urban cities. This is done with the sole purpose of trying to boost the segment since it not only promotes a better economy of the country, but also helps to improve the quality of our citizen’s life.