Wednesday, December 1, 2021
BusinessDemand and supply of affordable housing to rise

Demand and supply of affordable housing to rise

Published: 5th Feb 2021 7:16 pm

New Delhi: The government’s decision to extend additional tax deduction of Rs 1.5 lakh on home loan interest till March 31, 2022, and tax holidays on affordable housing projects in the Budget will boost demand for residential properties, according to real estate developers and consultants. However, builders were disappointed as the Finance Minister did not consider many demands, including industry or infrastructure status, single-window approval for projects, input tax credit on GST and extra allocation in stress fund.

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The chairman of realtors’ apex body CREDAI, Jaxay Shah, said this will boost overall demand for affordable housing, the fastest growing segment for the real estate sector. The proposed amendments to allow debt funding through REITs would help in attracting more investments in real estate sector, CREDAI president Satish Magar said, adding that the proposal to make dividend payments to REIT exempt from TDS would encourage retail investors to explore investment opportunities in REITs.

Naredco president Niranjan Hiranandani welcomed the second extension of the deadline for the additional Rs 1.5 lakh tax deduction given on loans taken to buy a house. “The real estate industry appreciates the fact that FM extended the interest deduction for home buyers and the tax holiday for affordable housing projects (both by a year) which should catalyse more growth,” said Anshuman Magazine, chairman & CEO, India, South East Asia, Middle East & Africa, CBRE. Anarock chairman Aunj Puri said the affordable housing and rental housing got a big boost with the government extending the period for extra deduction available for loans.

“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,” he added. Ramesh Nair, former CEO of JLL India, said positives for the real estate sector include extension of Rs 1.5 lakh additional deduction for affordable housing, tax holiday for affordable housing extended by one more year and new tax incentives for affordable rental housing for migrant workers.

Among negatives, Nair said the Budget has no mention of allowing 100 per cent FDI in completed housing projects, no announcement of more funds under SWAMIH, no mention of setting up of a single window clearance system for approvals, not allowing GST input tax credit for under construction projects, no reduction in GST on building materials, not incentivising States to rationalise stamp duty and no concrete announcement with regards to making more credit available for real estate sector.

Dhruv Agarwala, Group CEO,, and Proptiger. com, said the government’s move in the Budget to extend the benefit of additional tax deduction on home loan interest will act as a further impetus to the residential property sector. Sahil Vachani, MD & CEO, Max Ventures & Industries, said the decision of not to deduct TDS on REITs and InVITs is a welcome move for the real estate industry, particularly the commercial category. “It will help attract investment in commercial real estate assets and help boost the demand for A-grade office spaces across the country especially in the bigger cities, which are hubs of employment activities.”

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