The Budget Extends Tax Holiday for One Year Boosting Demand of Affordable Housing Projects
There is an expected increase in the demand and supply of affordable housing projects with the increase in the interest deduction limit of 150,000 by another year i.e. till 31 st March’ 2021. Last year, the government extended the approval timeline for such projects on or before 31 st March’2020. This is applicable for Residential Projects Noida falling below Rs.45 lakhs in tier II, III and peripheral parts of the metro cities. This year, the timeline extended to one year. Currently, a first- time home buyer can claim deduction up to Rs 2 lakh on the interest amount and Rs.1.5 lakh is exempted as the housing loan principle amount.
An affordable housing is one housing segment that has been witnessing a steady increase in the demand from the last 18 months. With extension of tax holiday for one more year, it is expected that the end-consumers keep investing in such projects because majority of the home buyers fall in mid-income and low-income segments and even realty developers will launch more affordable housing projects to create a perfect balance between the demand and supply. With this announcement, the Government is moving step by step ahead for fulfilling its objective of “Housing for All” by 2022.
However, the Union budget 2020-2021 is unable to bring a major relief to ailing realty sector. Long pending demands of industry status and liquidity crunch not been addressed yet.