From ET Realty
The increased exemption of an additional Rs 50,000 towards home loan EMI for first-time buyers may enthuse fence-sitters to take the plunge.
Finance minister Arun Jaitley in his budget speech on Monday announced 100% deduction for profits to an undertaking from a housing project for flats up to 30 sq m in four metro cities and 60 sq m in other cities, approved during June 2016 to March 2019, and completed within three years.
Nitin Kulkarni, director of Vastusbodh Projects, said, “It is encouraging for affordable housing. Income tax exemption (similar to 80IB) for all projects with less than 60 sq m carpet area (in line with the definition of the credit-linked subsidy scheme) has been offered. However, the period of completion of the project is three years, which is difficult when project sizes are big. Typically, affordable housing business is a volumetric business and of greater scale. The tenure for completion should be increased to five years.”
The affordable housing sops in the budget will boost employment opportunities besides address issues of housing sector in metro cities, Mahratta Chamber of Commerce, Industries and Agriculture Satish Magar said. “The focus on infrastructure spending is directly linked to housing. The service tax exemption to affordable housing will escalate construction of fresh projects in the fringe areas and decongest main city areas. Overall, the measure should help boost the stock of affordable housing in cities,” J P Shroff, director of Shroff Group and convenor of skill development, Credai Pune Metro, said.
Sanjay Dutt, managing director-India, Cushman & Wakefield, said the announcement would increase focus on the segment, which has been largely ignored owing to business viability issues. Incentives for developers would help them focus on construction of affordable housing projects across metros and non-metros cities, he added.
Anuj Puri, chairman & country head, JLL India, said, “Most first-time home buyers in the metros will be left out of the additional Rs. 50,000 tax exemption announced today, as it is applicable only on houses worth up to Rs 50 lakh with loans of up to Rs 35 lakh for houses. This announcement will benefit first-time home buyers in tier-III and tier-II cities.”
A study on housing conducted by non-governmental organization Mashal for the PMC said there is a shortfall of 2.5 to 3 lakh affordable housing units in mid-city areas which may double in the next few years,considering the rate of migration. According to experts, ongoing efforts on housing for the economically weaker sections are piecemeal and a comprehensive policy is needed, if anything is to be achieved.
The study states, “The most stark and visible sign of the severe shortage of affordable housing that afflicts Pune, and other fast-growing cities across India, is the incessant growth in the number of slums. In Pune, it is estimated that 40.56% of the city’s population lives in slums at present, as compared to fewer than 20% 15 years ago. The housing stock periodically created over the years, by both the public and private sectors, under labels like Economically Weaker Section (EWS) or Low Income Group (LIG) have proved to be grossly inadequate to provide for the growing squatter settlements and slums in urban areas.”