New Tax Benefits Boost Affordability

New Tax Benefits Boost Affordability

While the Union Budget has increased the affordability of budget housing by enhancing the interest rebate on home loan for firsttime buyers, states like Haryana have gone a step ahead with their own affordable housing schemes, to help realize PM Modi’s ‘Housing for all’ programme— A K Tiwary

The exemption of Rs 1.5 lakh on interest paid on housing loan in Budget 2019-20, over and above the existing exemption of Rs 2 lakh for properties costing up to Rs 45 lakh, will boost demand for housing, especially in the NCR region, as most buyers come in lower and mid-income segment housing here.

Ramesh Nair, CEO and country head of JLL India, said that sale of housing, which recovered in 2018, has seen a resurgence in the first half of 2019 as well, and that the government incentives in Budget 2019-20 will help homebuyers.

This will benefit first-time homebuyers, who will enjoy the benefits of interest subvention under the CLSS scheme and the announced tax benefits in the Budget. Also, with effective interest coming down, it will increase the eligibility for mid-income housing segments.

Under the mission “Housing for all”, Budget 2019-2020 has provisioned for an additional interest deduction on repayment of home loans under certain conditions. Currently, the taxman allows deduction of up to Rs 2 lakh on the payment of interest on home loans under Section 24 of the Income Tax Act, 1961. The Budget has proposed to introduce Section 80EEA to allow for an additional interest deduction of up to Rs 1.5 lakh on the repayment of home loans.

The total deduction in taxable income will be provided to first-home buyers taking loans up to March 31 next year to buy a house costing up to Rs 45 lakh.

Ssumit Bedi, MD of BDI Group, said: “To claim the additional interest deduction on repayment of home loans, the loan must have been taken from a financial institution or a housing finance company for buying a residential house property. Stamp duty value of the house property should be Rs 45 lakhs or less. But the taxpayer should be a first-time homebuyer. He should not own any residential house property as on the date of sanction of the loan.”

Now first-time buyers can avail interest benefits of up to Rs 3.50 lakh and prospective buyers can avail loan up to 80% of the property value from all leading institutions. The focus is not only to provide affordable housing but also to solve the problem of unorganized colonies cropping up at various places.

Haryana has been doing extremely well in its endeavor to provide affordable housing. Under the Deen Dayal Jan Awas Yojana (DDJAY), the government aims to develop 1 lakh affordable houses in next 3 years.

Haryana has taken meticulous steps to make sure that new housing colonies are well-planned. One of the schemes to help this along is the Deen Dayal Jan Awas Yojana (DDJAY), an affordable housing scheme to encourage the development of “high density plotted colonies” in low and medium potential towns of Haryana through a liberal policy framework.

This is aimed at keeping a check on unauthorized colonies and simultaneously achieves the target of “Housing for all by 2022”.

All projects under DDJAY are mandated to be ready within seven years from the date of licence. Only 30% of the total area of a designated residential sector can be developed under this policy. Aggregated area of colony in this scheme is up to 15 acres where the first licence would be for five acres or more and additional licence for a minimum of two acres.

To keep the housing costs affordable, the external development charges (EDC) for projects under the DDJAY are lower than normal projects.

Under the Haryana Affordable Housing Scheme, the state government reduced the minimum land requirement for a group-housing project, from 10 acres to 5 acres; increased FAR, from 1.75 to 2.25 acres; increased population density from 450 PPA (people per acre) to 900 PPA, and waived off IDC and license fee for developer.

Raheja Developers is coming up with Raheja Akshara at a base price of Rs 25,000 square yards while Supertech if offering affordable housing plots at Rs 27,000 square yards in Sohna (South of Gurgaon). Signature Global has bought land in Sohna under DDAY to launch 1,00,000 units by 2022 in support of PM Modi’s vision of “Housing for all”.

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