New Delhi: Aiming to boost demand in realty sector, the government on Monday proposed an additional Rs 50,000 deduction on interest on loans for first home buyers and tax incentives on development of affordable housing, besides exempting REITs from dividend distribution tax.
The government also exempted from service tax construction of affordable houses up to 60 sq metres under any scheme of the central or state government including PPP schemes.
Real estate sector, particularly housing segment is facing a huge slowdown for the last 2-3 years, resulting in a huge delay in delivery of projects to customers and piling up of unsold inventories. Listing promotion of affordable housing as as one of the thrust area, Finance Minister Arun Jaitley in his budget speech said: “For the ‘first–home buyers’ I propose to give deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned during the next financial year, provided the value of the house does not exceed Rs 50 lakh”.
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At present, Rs 2,00,000 deduction is allowed for interest paid on home loans.
In a relief to individual tax payers, Jaitley also increased the tax deduction limit to Rs 60,000 per annum from the current Rs 24,000 on housing rent.
To boost supply of affordable homes, he proposed 100 per cent deduction for profits to an undertaking from a housing project for flats up to 30 sq metres in four metros and 60 sq metres in other cities.
