Union Budget 2021: Extension of tax sops for affordable housing to strengthen confidence among developers and homebuyers, say realtors

New Delhi: Finance Minister Nirmala Sitharaman's announcement to extend additional tax deduction of Rs 1.5 lakh on home loan interest till March 2022 and tax holidays on affordable housing projects in the Union Budget 2021 will boost demand for residential properties, according to real estate developers and consultants.

Announcing relief to affordable housing and rental housing in the Union Budget 2021, the Finance Minister proposed to extend the eligibility period for claim of additional deduction for interest of Rs. 1.5 lakh paid for loan taken for purchase of an affordable house to 31st March, 2022.  

In order to increase the supply of affordable houses, she also announced extension of eligibility period for claiming tax holiday for affordable housing projects by one more year to 31st March, 2022.  For promoting supply of affordable rental housing for the migrant workers, the Minister announced a new tax exemption for the notified affordable rental housing projects. 

Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited appreciated Finance Minister’s plan to introduce a Bill to set up a DFI (developmental financial institution) for long-term funding infra projects with a capital of Rs 20,000 crore and lending Rs 5 lakh crore in the next 3 years. He also said, Acknowledging the role of NRI homebuyers and increased interest amid the pandemic, the government’s decision to reduce NRI residency limit will help. Raising customs duty on solar inverters to 20% from 5% is likely to add to the cost of the commercial and residential developments while monetization of land is likely to provide more land for development and arrest its rising cost.

Satish Magar, President CREDAI National said, Continuous focus on expanding highways, developing infrastructure, road & rail transport, metro rail projects shall play a crucial role in connecting all corners of the country further boosting demand for housing in these areas, thereby promoting economic activity and job creation.

Jaxay Shah, Chairman CREDAI National said “This is clearly a budget for growth with next level reforms, focusing on the healthcare, infrastructure and financial sectors and establishes a stable tax regime and higher borrowing for CAPEX. 

Geetamber Anand, CMD ATS Infrastructure ltd and Co - chairman, Real Estate Committee, FICCI said Union Budget 2021-2022, is the much needed catalyst for India’s post-covid revival. 

"However, what the sector requires is immediate infusion of liquidity to give a kick-start to the stalled projects and support the 270 allied industries who are dependent on the realty sector for its survival and revival," he added.

Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd said, "For real estate, the move to extend the tax holiday available for the purchase of affordable houses as well as for the affordable rental housing projects is a welcoming move as it would further strengthen the confidence among both developers and homebuyers."