On Monday, February 1, 2021, the Union Budget was presented by Finance Minister Nirmala Sitharaman in the Parliament. This year’s Budget is something everyone was looking forward to because of the impact the worldwide health crisis has had on the Indian economy. With the Indian economy registering its first negative GDP in the first quarter ever since the time of Independence, this Union Budget was a ray of hope for many.
The impact of the lockdown restriction was such that many businesses were forced to shut down and many people lost their source of earning. As per the reports, debt has been mounting over our economy. With vaccination drives in full swing and the country being able to avoid the second wave of infections, the finance and economy experts suggest that the Indian economy is on the path of recovery.
In the Union Budget announced on Monday, the government has decided to extend the additional tax deduction of Rs 1.5 lakh on interest paid on a housing loan. It is for the purchase of affordable homes by one more year to March 2022.
It is the government’s move to boost demand in the real estate section which has been severely impacted because of the on-going scenario.
For the unknown, the additional deduction of Rs 1.5 lakh over and above Rs 2 lakh was introduced in the budget of 2019. It was for those buying homes for the first time and of up to Rs 45 lakh.
The Finance Minister, in her budget speech for the Financial Year 2021-22, said that the centre sees ‘Housing for All’ and affordable housing as its priority areas. As per the measure, a person now purchasing an affordable house will get an enhanced interest deduction of up to Rs 3.5 lakh.
FM Nirmala Sitharaman also added, "Further, to keep up the supply of affordable houses, I propose that affordable housing projects can avail a tax holiday for one more year – till 31st March 2022.”
She also placed emphasis that the government is keen to promote the supply of affordable renting housing for migrant workers.
Ms. Sitharaman also said for the same purpose she proposes to allow tax exemption for notified Affordable Rental Housing Projects.
These two Budget proposals are aimed at boosting demand as well as supply in the affordable housing section. It has already been accorded with the infrastructure status.
The figures show that the housing sales across major 7-8 major cities fell around 40-50 percent during the year 2020. The major impact was due to the lockdown restrictions and the health emergency across the world. However, the demand is gradually improving since July last year on pent up as well festive demand.