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Tax boost for budget housing

Further, infra works have been proposed that include building 8,500-km of highways by March 2022.

By Y V Phani Raj

Published Date - 2 February 2021, 12:32 AM

Tax boost for budget housing — Representational Image.

Hyderabad: 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.

Further, infra works have been proposed that include building 8,500-km of highways by March 2022. The government also announced the Bill to set up Development Finance Institution (DFI) providing Rs 20,000 crore to boost infrastructure projects. Customs duty on steel reduced to 7.5 per cent will create some space to real estate developers who may not be in a position to increase prices immediately, according to Anuj Puri, chairman, Anarock Property Consultants.

Shishir Baijal, CMD, Knight Frank India, said, announcements relating to monetisation of infrastructure and real estate assets will help increase private sector participation and also assist government in enhancing fund flow for development of critical infrastructure assets. The government has also continued its focus on affordable housing segment by extension of tax benefit by one year.

Amid the prolonged pandemic scenario, this extension was needed to support the latent housing demand in the country. Further, the relaxation on tax compliance for REIT investors will further improve the marketability of such products considering we are likely to witness new REITs this year, Baijal noted.

According to Dr Samantak Das, chief economist, JLL India, the proposed easing of restrictions on leverage by InvITs/REITs will attract more REITs listings and thus higher investments into real estate. The announced monetisation of surplus land of government and government bodies is a welcome move; however, the implementation will need to be monitored.

“While the government has not announced any significant fresh policies and / or programmes pertaining to real estate, its commitment towards boosting affordable housing remains intact,” added Das.

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