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The Union Budget 2021 comes with several measures to help the real estate sector in India revive. It aims to achieve this by boosting the affordable housing segment through several changes. Considering the difficult fiscal situation of the Indian economy during the pandemic, this was certainly one of the most awaited budgets in India till date. Real estate sector being one of the most significant components of the economy, the affordable housing segment has been paid considerable attention.
The tax holiday for the affordable housing projects in India has now undergone an extension of the time-limit for availability. The projects under this segment that get launched up to 31st March 2022 can now enjoy the tax holiday. This would certainly act as an incentive for more developers to come up with affordable projects. The affordable rental housing segment has received a boost too, with the new budget granting a 100% tax holiday for the affordable rental housing projects notified by the government before or on 31st March 2020.
Previously, a tax benefit of INR 1.5 crore on home loans had been announced, effective for properties priced under INR 45 lakhs. The validity of this scheme has been extended till 31st March 2021. The government also extended certain tax exemptions that would promote the recycling of residential properties and thereby help to mitigate the shortage of affordable homes. The difference between the stamp value and sale consideration has also been relaxed by up to 20% for the properties priced under INR 2 crore.
The real estate players, including the developers and investors, had high expectations for the Union Budget considering the immediate changes necessary to boost the industry. While many of these got fulfilled, a few additional steps were anticipated. For instance, many had been awaiting a change in the interest deduction that would raise the deduction from INR 2 lakhs per year to INR 5 lakhs per year. This, however, did not happen. It was also expected that the budget would reduce the holding period necessary for properties to qualify as long-term capital gains to 12 months.
The changes brought about by the Union Budget this year would evidently act as a major boost for the Indian real estate sector and eventually for the economy. Considering the fact that affordable properties are very high in demand without adequate projects offering such homes, the changes in the policies have been welcomed in a widespread manner.
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