The housing sector has received a major boost from the Union Budget even as Finance Minister Arun Jaitley provided infrastructure status to the affordable housing segment.
The infrastructure status would mean loans would be cheaper, creating demand for housing in this segment.
Industry experts have praised the move. “Affordable housing getting infrastructure status will enable efficient supply of housing stock in the country and provide benefits associated with it,” CREDAI national president Getamber Anand said.
The government has proposed to amend section 80-IBA to give some relaxation on the period of completion of a project to claim tax deduction, by raising it from three years to five years.
Furthermore, the National Housing Bank (NHB) will be refinancing individual housing loans of about `20,000 crore in the financial year 2017-18. This coupled with the fact that the entire banking system is flush with liquidity are some other factors that will eventually bring down the cost of borrowing — a major boost to the sector.
Another leeway has been provided on taxation. Under the scheme for profit-linked income tax deduction for promotion of affordable housing, the carpet area instead of built up area of 30sqm and 60sqm will be counted. As a result, more projects are likely to come under the umbrella of this scheme.
“The 30sqm limit will apply only in case of municipal limits of four metro cities while for the rest of the country, including in peripheral areas of metros, limit of 60 sqm will apply,” the highlights of the Budget indicated.
Jaitley also provided relief to builders. At present, houses that are unoccupied after getting completion certificates are subjected to tax on notional rental income. This tax will now be applied only after a year of receiving the certificate.
“Builders for whom constructed buildings are stock-in-trade, I propose to apply this rule only one year after the completion certificate is received so that they get some breathing time to liquidate their inventory,” he said.
(With PTI inputs)