Finance Minister Nirmala Sitharaman presented the Union Budget 2024 on July 23, marking the third term of the BJP-led National Democratic Alliance (NDA) government. This significant event has both consumers and realtors looking forward to growth-oriented reforms from the Modi government.
Revamped Housing Schemes Under PMAY
The government announced new rural and urban housing schemes in this budget. Under the revamped Pradhan Mantri Awas Yojana-Grameen (PMAY-G), cash support will likely be increased to around ₹2.3 – ₹2.4 lakh/housing unit from ₹1.2 – ₹1.3 lakh in the previous scheme. Similarly, the PMAY-U could also introduce schemes designed to assist the urban poor and middle class cope with the rising costs of building homes.
Revival of Credit-Linked Subsidy Scheme (CLSS)
The government is considering reviving the Credit-linked Subsidy Scheme (CLSS) under PMAY, which expired in 2022. This scheme subsidised the Economically Weaker Section (EWS) and Low-Income Groups (LIG) purchasing affordable homes. Resurrecting this scheme will stimulate demand among first-time homebuyers by offering subsidies for new constructions, upgrades to existing dwellings, and the conversion of ‘kaccha’ homes into ‘pucca’ ones under PMAY (Rural). The revival of CLSS is expected to incentivise EWS/LIG buyers, invigorating demand in this segment.
Increased Tax Benefits for Homebuyers
Piyush Bothra, Co-Founder and CFO of Square Yards highlights a crucial expectation regarding the anticipated tax benefit: “One key expectation is to elevate the current Rs 2 lakh tax deduction on housing loan interest under Section 24(b) of the Income-tax Act, 1961, to a minimum of ₹5 lakh. This adjustment is crucial to strengthening housing demand, especially within the affordable housing segment.”
Similarly, a plea to the Finance Minister to increase the income tax deduction applicable to home loan repayments. The current deduction of ₹2 lakh against home loan interest has remained unchanged for a decade, with the previous adjustment being an upsurge of ₹50,000 in 2014. Given the rise in property prices and interest rates, he suggests doubling the home loan interest deduction limit to ₹4 lakh to provide substantial relief to potential homebuyers.
Revising the Definition of Affordable Housing
The Ministry of Housing and Urban Poverty Alleviation defines affordable housing based on the buyer’s property size, price, and income. This includes houses or apartments with a carpet area of up to 90 sqm. in non-metropolitan areas and 60 sqm. in major cities, valued at up to ₹45 lakh. However, experts argue that this price cap is not viable in most cities like Mumbai. They propose revising the affordable housing budget to reflect city-specific market dynamics, suggesting an increase in the price ceiling to ₹75 lakh and the carpet area of the property to 90 sqm.
Single-Window Clearance System
To further enhance the real estate sector, a single-window clearance system for all real estate projects has been proposed. This system would streamline approvals and clearances, reducing bureaucratic delays and enhancing business efficiency. The government aims to strengthen the real estate sector by implementing these strategic measures, contributing significantly to the nation’s economic resurgence.
For a detailed report on this read the articles we were featured in:
The Economic Time – https://bit.ly/3zXht6J
Published Date: 17 July, 2024
