Aiming to boost the affordable housing demand, Finance Minister Nirmala Sitharaman on Saturday proposed to extend the date of availing an additional Rs 1.5 lakh tax deduction on home loan interest by one more year till March 2021.
The additional deduction of Rs 1.5 lakh over and above Rs 2 lakh was introduced in the last year's budget. This was allowed for those buying homes for the first time and of up to Rs 45 lakh and made applicable for home loans sanctioned till March this year.
The finance minister also announced that builders will get tax holiday on affordable housing projects approved till March 2021.
"For realisation of the goal of ''Housing for All'' and affordable housing, in the last budget I had announced an additional deduction of up to Rs 1.5 lakh for interest paid on loans taken for purchase of an affordable house. The deduction was allowed on housing loans sanctioned on or before March 31, 2020.
"In order to ensure that more persons avail this benefit and to further incentivise the affordable housing, I propose to extend the date of loan sanction for availing this additional deduction by one more year," the minister said.
The additional deduction of Rs 1.5 lakh, over and above the existing Rs 2 lakh, is being provided under the Section 80EEA.
The real estate industry, which is facing a huge demand slowdown and sluggish housing sales, had sought extension of this additional deduction, but wanted the price cap of Rs 45 lakh to be enhanced.
Stating that the government provides tax holiday on profits earned by developers of affordable housing project approved till March 2020, Ms Sitharaman said the government proposes to extend the date of approval of affordable housing projects for availing this tax holiday by one more year.
This tax holiday is being provided under the section 80-IBA of the Income Tax Act. It was applicable on the project approved by the competent authority during the period from June 1, 2016 to March 31, 2020, which now has been extended by a year.
"Currently, while taxing income from capital gains, business profits and other sources in respect of transactions in real estate, if the consideration value is less than circle rate by more than 5 per cent, the difference is counted as income both in the hands of the purchaser and seller. In order to minimise hardship in real estate transaction and provide relief to the sector, I propose to increase the limit of 5 per cent to 10 per cent," she said.