Sops for affordable homes may be extended by a year

Finance minister Nirmala Sitharaman is likely to extend the additional interest deduction of ₹1.5 lakh on affordable housing loans till March 2023, two people privy to the development said seeking anonymity.

This additional deduction benefit over and above the ₹2 lakh that was first announced in July 2019 has since been extended twice, with the latest extension available till 31 March. However, only first-time homebuyers can avail of the incentive.

Affordable housing remains a major focus of the government, and steps to boost the housing and construction industry are likely to feature in the budget for the year starting 1 April, the people cited above said. The budget is scheduled to be presented in Parliament on 1 February.

The people cited above said the tax holiday on affordable housing projects is also likely to be extended by a year.

Queries sent to the ministries of finance and housing and urban affairs remained unanswered till press time.

Last budget, Sitharaman announced the extension of the tax holiday till March-end.

Rajan Bandelkar, president of the National Real Estate Development Council, said affordable property prices and record-low interest rates had prompted homebuyers to purchase their dream homes. The extension in interest deduction would help boost demand further, he added.

Along with tax benefits, companies and industry experts have also sought a change in the definition of affordable housing to extend the benefits of additional deductions to more homebuyers.

Anuj Puri, chairman of property services company Anarock Group, said: “The government must seriously reconsider revising the pricing of homes within the affordable housing budget city-wise. While the size of units as per its definition (60 sq. m carpet area) is fairly appropriate, prices of units (up to ₹45 lakh) are definitely not viable across most cities.”

Bandelkar also said that the government should consider removing the ₹45 lakh cap.