The minister said the government is committed to promoting the provision of affordable rental housing for migrant workers.
On Monday, the government extended the additional 1.5 lakh tax deduction on interest paid on home loans for the purchase of affordable housing by one year until March 31, 2022, a measure to boost demand in the sluggish real estate sector.
The additional deduction of ₹ 1.5 lakh on top of ₹ 2 lakh has been introduced in the 2019 budget. This has been allowed for first time buyers and up to 45 lakh.
In the budget speech for fiscal year 2021-2022, Finance Minister Nirmala Sitharaman said the government sees “housing for all” and affordable housing as priority areas. Now, a person who buys an affordable home will get an increased interest deduction of up to 3.5 lakh. “In addition, to maintain the supply of affordable housing, I propose that affordable housing projects can benefit from a tax holiday for one more year – until March 31, 2022,” Ms. Sitharaman said.
The minister said the government is committed to promoting the provision of affordable rental housing for migrant workers. “For this, I propose to allow a tax exemption for the notified Affordable Rental Housing Projects.” These two budget proposals aim to increase demand as well as supply in the affordable housing segment, which has already been granted with infrastructure status.
According to real estate consultants and data analysis companies, home sales in the 7-8 major cities fell by around 40-50% in calendar year 2020 due to the COVID-19 pandemic . However, demand has steadily improved since July of last year due to pent-up and festive demand.