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Union Budget: Affordable housing given a push but some real estate players feel left out

Jaxay Shah, Chairman, CREDAI National, said this move will boost overall demand for affordable housing, which has been the fastest growing segment for the real estate sector

Published: 01st February 2021 07:47 PM  |   Last Updated: 01st February 2021 07:47 PM   |  A+A-

Union Finance Minister Nirmala Sitharaman speaks during the post-budget press conference, at National Media Centre in New Delhi. (Photo | PTI

Union Finance Minister Nirmala Sitharaman speaks during the post-budget press conference, at National Media Centre in New Delhi. (Photo | PTI

Express News Service

Housing for all and affordable housing were termed priority areas in Finance Minister Nirmala Sitharaman's budget. The Union Budget proposed extension of interest deduction for home buyers and tax holidays on affordable housing projects for one more year.

"In the July 2019 Budget, I provided an additional deduction of interest, amounting to Rs 1.5 lakh, for loan taken to purchase an affordable house. I propose to extend the eligibility of this deduction by one more year, to 31st March 2022," Sitharaman said in her budget speech.

Jaxay Shah, Chairman, CREDAI National, said this move will boost overall demand for affordable housing, which has been the fastest growing segment for the real estate sector. Anuj Puri, Chairman - ANAROCK Property Consultants, said these steps will keep demand buoyant for affordable housing in 2021 as well. Further, the extension of the tax holiday for affordable housing projects for one more year will help bring in more new supply within this segment.

As per ANAROCK Research, affordable housing already accounts for more than 35 per cent of the supply across the top seven cities in the country.

The budget also proposed amendments to allow debt funding through estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

Anshuman Magazine, Chairman and CEO - India, South East Asia, Middle East and Africa, CBRE said, "Proposing to make dividend payments to REIT (estate investment trusts) and Infrastructure investment trusts exempt from TDS this year is another great move as it will be helpful in addressing the liquidity situation in the real estate industry. Debt Financing of InVITs and REITs by Foreign Portfolio Investors has been enabled by suggesting amendments in the relevant legislations. This is likely to ease access of finance to InVITS and REITs thus augmenting funds for the infrastructure and real estate sector."

However, the industry at large felt ignored as most of its demands did not find a mention in Sitharaman's budget.

Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani, said the government could have given a further boost to the real estate sector. "There have been many pressing concerns in the real sector that have not been addressed such as easing liquidity, reduction in levies/taxes, tax deductions on home loans to give impetus to buyer sentiment, granting of industry status to the overall real estate sector and implementation of single window clearance amongst others," said Hiranandani.

Shah of Credai also said that popular demands for changes in IT slabs, increasing the limit of 80C, lower home loan interest rates etc were not announced in the budget. Steps required to ensure more money in the hands of taxpayers to encourage spending were also not addressed.

Lindsay Bernard Rodrigues, Co-Founder and Director, Bennet & Bernard Group, said the sector needed many more interventions on the demand side for meaningful growth. He added, "The Indian real estate sector is the most highly taxed with the combination of high direct and indirect taxes, stamp duties and levies for development approvals which have been crippling growth. A key expectation was the restoration of income tax benefit on a second home which would have benefitted home buyers in a big way and stimulated the real estate sector. It was also important to bring back the input tax credit as part of GST reforms and lower GST rates for purchase of raw materials which would have helped reduce the cost of construction."



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