The Bud­get aims at stim­u­lat­ing res­i­den­tial de­mand in the af­ford­able seg­ment. Call for in­fra­struc­ture sta­tus for the realty sec­tor is ig­nored

HT Estates - - NEWS - Van­dana Ram­nani

Re­ac­tions to fi­nance min­is­ter P Chi­dambaram’s Bud­get pro­pos­als for the realty sec­tor were mixed, rang­ing from “mod­er­ately en­cour­ag­ing” to “no sig­nif­i­cant ben­e­fits.” While it gives a big push to af­ford­able hous­ing with an ad­di­tional in­ter­est ben­e­fit of R1 lakh to first home loans of R25 lakh, it makes lux­ury homes costlier by cut­ting abate­ment on ser­vice tax on a flat ex­ceed­ing R1 crore and pro­poses to levy a 1% TDS on im­mov­able prop­er­ties of above R50 lakh. Realty ex­perts say that while the first pro­vi­sion may be a pos­i­tive step and pro­vide a fil­lip to af­ford­able hous­ing, a lot more is re­quired to cre­ate sup­ply in the R25 lakh cat­e­gory. Such sup­ply is only found in Tier-2 and Tier-3 towns and not in the met­ros where the bulk of mi­gra­tion takes place.

Ac­cord­ing to the Bud­get, a first home loan of up to R25 lakh dur­ing the fi­nan­cial year 2013-14 will be al­lowed an ad­di­tional tax de­duc­tion of in­ter­est of up to R1 lakh. With cur­rent in­ter­est rates hover- ing around 10% for home loans, the (at cur­rent rates) en­tire year’s in­ter­est will be el­i­gi­ble for de­duc­tion within the ex­tended limit of R2.5 lakh. “This is likely to have a dual im­pact – im­pe­tus to the growth of af­ford­able hous­ing seg­ment and in­crease in em­ploy­ment op­por­tu­ni­ties in the con­struc­tion sec­tor,” says Neeraj Bansal, direc­tor, ad­vi­sory, KPMG.

How­ever, this pro­vi­sion is only for the first year with a carry-for­ward ben­e­fit of the unutilised de­duc­tion to the sec­ond year. This will help boost hous­ing sales in Tier- 2 and 3 cities and pe­riph­eral ar­eas and dis­tant sub­urbs of met­ros, but not within the met­ros, where hous­ing is more tar­geted to­wards the mid and up­per in­come seg­ments, says Anuj Puri, chair­man and coun­try head, Jones Lang LaSalle In­dia.

For avail­ing this de­duc­tion, the as­sessee will have to en­sure that he does not own any house on the date of sanc­tion of the loan. The loan amount should not be more than R25 lakh and the value of the prop­erty should not be more than R40 lakh, points out Bal­want Jain, CFO, Ap­na­paisa.

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