Budget 2021: Here's how FM Sitharaman gave a boost to affordable housing

Updated : February 01, 2021 02:01 PM IST

Sitharaman in the Budget proposed to extend the Rs 1.5 lakh benefit on interest paid on affordable housing loans by one year to March 31, 2022.

Affordable housing projects are given a deduction under Section 80IBA of the Income Tax Act.

Sitharaman also provided tax exemption for affordable rental housing projects

Giving another push to the ‘Housing for All’ goal, the Union Budget 2021 has yet again has announced incentives for affordable housing, giving a boost to the sector and home-buyers as well.

The government proposed to extend exemption available for the purchase of affordable houses and to provide tax exemption for affordable housing projects.

Finance Minister Nirmala Sitharaman in the Budget proposed to extend the Rs 1.5 lakh benefit on interest paid on affordable housing loans by one year to March 31, 2022. Last year this was extended by a year to March 2021 from March 2020 earlier.

Affordable housing projects are given a deduction under Section 80IBA of the Income Tax Act.

The FM has proposed to extend the date of loan sanction for availing this additional deduction by a year to March 2022 from March 2021 earlier in order to ensure that more persons avail this benefit.

“I propose to extend the eligibility of this deduction by one more year, to 31st March 2022,” Sitharaman said in her speech, adding that the government saw ‘Housing for All’ and affordable housing as priority areas," Sitharaman said in her Budget speech.

Also, to keep up the supply of affordable houses, the Budget has proposed that affordable housing projects can avail a tax holiday for one more year – till 31st March, 2022.

“We are committed to promote supply of Affordable Rental Housing for migrant workers. For this, I propose to allow tax exemption for notified Affordable Rental Housing Projects,” Sitharaman said.

Real estate industry players welcomed the move as they expect this will keep demand buoyant for affordable housing in 2021 as well.

"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 percent of the supply across the top 7 cities in the country," said Anuj Puri, Chairman, ANAROCK Property Consultants.

Niranjan Hiranandani -National President - NAREDCO and MD - Hiranandani Group is of the view that tax exemption for notified affordable housing for migrant workers, and the proposals will give a fillip to this emerging segment.

"As affordable housing attracts only 1 percent GST and Rs 1000 stamp duty in the state of Maharashtra will augment the production of affordable housing in the state," Hiranandani said.

Stay tuned with all the live action and updates with our Budget 2021 Live blog.