Budget 2021: How FM Sitharaman made griha pravesh easier for aam aadmi this year | Photo credit: Thinkstock
Roti, kapda aur makan (Food, clothing, accommodation) – has always been the ambitious mantra of every Indian, rich or poor. While roasted and kapda are no longer a source of concern for a majority of Indians, thanks to economic liberalization, but makaan is still something that most wealthy Indians aspire to.
However, owning a home continues to be banned for most given that a majority of Indians, 57% to be precise, earn less than Rs 2.5 lakh per year, according to 2020 data from the Income-Tax department.
But FM Nirmala Sitharaman has made proposals in the 2021-22 Union budget, to reduce the impact of the huge cost of owning a house for the aam aadmi or common man â in the form of affordable housing sops.
FM Sitharman has announced a number of incentives for affordable housing and rental housing under direct tax proposals.
Market conditions are also auspicious for those aspiring to own their own homes due to record interest rates and falling home prices. In addition, some states like Maharashtra and Karnataka have already reduced stamp duties.
The Minister of Finance has proposed to extend the eligibility period to claim an additional deduction for interest of Rs 1.5 lakh paid for the loan taken out for the purchase of an “affordable house” until March 31, 2022.
This additional deduction of up to Rs 1.5 lakh for home loans taken to buy affordable homes was introduced in the 2019-2020 budget, eligibility for it has been extended until March 31, 2022.
“The government’s decision in the budget to extend the benefit of an additional tax deduction of Rs 1.5 lakh on interest on mortgage loans, until March 31, 2022, will give new impetus to the real estate sector This decision will bode well, in particular for the affordable housing segment, which will also benefit from the decision to offer a tax holiday for affordable housing projects for one more year, in order to stimulate supply â, said Dhruv Agarwala, group CEO, Housing.com, Makaan.com and Proptiger.com.
The FM also extended the tax break for affordable rental housing for one year to ensure affordable housing for migrant workers. To promote the supply of affordable rental housing for migrant workers, the minister announced a new tax exemption for notified affordable rental housing projects.
“The support FM announced for rental housing will also go a long way to helping migrant workers and helping them stay in subways and other major cities during times of financial hardship such as that presented by the Covid-19 pandemic,” Agarwala added. .
Tax benefits for mortgage repayment – explained
The government allows tax deductions on interest and principal repayments on home loans taken out by individuals. The mortgage is repaid in equivalent monthly installments (EMI) which also consists of the amount of the principal and the interest charged. Under Article 80-C, deduction of up to Rs 1.5 lakh (as well as other investments) on principal is allowed on total gross income.
In addition, a maximum deduction of up to Rs 2 lakh for interest paid during the year under section 24.