Budget 2021: Finance Minister extends timeline for Affordable Housing benefits till March 2022

In a bid to boost the supply of affordable rental housing facilities for migrant workers, the finance minister proposed to allow a new tax exemption for Affordable Rental housing projects

The Finance Minister, Nirmala Sitharaman has announced the extension of Affordable Housing benefits by a year till March 2022. This is noted as a major boost-up to affordable rental housing projects for migrant workers, with the FM Sitharaman going on to further introduce tax exemption for rental housing projects.

The income tax rebate of Rs 1.5 lakh for affordable home loans will continue until March 2022, she said.

With an intent to boost up the supply of Affordable Rental housing for migrant workers across the country, the Finance Minister also proposed to introduce new tax benefits for the Affordable Rental Housing Projects.

Dr. Niranjan Hiranandani, National President NAREDCO and Managing Director, Hiranandani Group, commenting on the Annual Budget, said, “It is a get well soon type of Budget, the ‘V’ shaped recovery being powered by the Covid-19 vaccination program.” On real estate aspects, the proposals for the annual budget reinforce the Government’s focus on affordable housing. For the home buyer, the second extension of the deadline till 31 March 2022 for the additional Rs1.5 lakh tax deduction given on loans taken to buy a house in an affordable housing project is welcome, as is the developer whose affordable housing projects also get an extension for tax benefits, for projects completed till March 31, 2022. Similarly, tax exemption for notified affordable housing for migrant workers, and the deduction on payment of interest for affordable housing being extended by a year will give a fillip to this emerging segment. As affordable housing attracts only 1% GST and Rs 1000 stamp duty in the state of Maharashtra will augment the production of affordable housing in the state. The enhanced spending on public infrastructure projects like ports, railways, airports, warehousing, gas pipelines, metro, economic corridors is laudable and welcomed by industry that will give impetus to the employment generation and attract the essential investment to lift up the economic revival.

“The strong focus on digital covering setting up of a Fintech hub at Gift City, seen in sync with moves to enhance digital payments and use of Artificial Intelligence and Machine Learning etc. in governance, will give a fillip to creation of Digital India,” concluded Hiranandani.

“As anticipated, affordable housing and rental housing got a big boost with the government extending the period for extra deduction of Rs 1.5 lakh available for loans up to 31st March 2022. This 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,” said Anuj Puri, Chairman - ANAROCK Property Consultants.

As per ANAROCK Research, affordable housing already accounts for more than 35 percent of the supply across the top 7 cities in the country.

The Housing for All by 2022 initiative was launched by the Modi government within five months of assuming office. It’s all about ensuring a home for every Indian by 2022. To boost affordable housing and achieve the vision of Housing for all by 2022, the government (Central and State) have undertaken several initiatives, such as Pradhan Mantri Awas Yojana (PMAY) that aims to build 1 crore homes in urban and rural India by 2022.