Extension of Pradhan Mantri Awas Yojana scheme till December 2025
In anticipation of the upcoming budget, the real estate sector is eagerly voicing its expectations, seeking targeted measures to address affordability challenges and reinvigorate the housing market.
“The primary aspiration of the typical Indian is to have a home of their own, a formidable undertaking in a developing nation like ours. While the government has taken steps through the Pradhan Mantri Awas Yojana to address this issue, home ownership is still far from reality for the masses of the country,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
“For a large section of population, affordability remains the biggest challenge with the right home always being just out of reach for prospective homebuyers. On this front, the union budget has provided relief in the past by facilitating tax deductions for principal and interest components of home loans and even harvesting capital gains from sale of existing property. We believe that these measures can be tweaked further to have a real impact on affordability,” he said.
The Union Budget has historically provided relief through tax deductions on home loans, and stakeholders believe that further adjustments can significantly impact affordability.
Boost for affordable housing
The sector calls for an extension of the PMAY scheme until December 2025, considering it a potent tool for supporting economically weaker homebuyers. Additionally, there is a proposal to enhance eligibility criteria under PMAY to increase interest subsidies, aligning with market conditions and reducing EMI burdens. Furthermore, experts stressed on the need to raise the tax rebate on home loan interest rates under Section 24 of the Income Tax Act to make it more conducive for the affordable housing segment, Baijal said.
Incentivising rental housing
In addition to supporting homebuyers, there is a proposal to incentivise rental housing for the low-income segment. A suggested 100 per cent exemption for rental income up to Rs 3 lakh for houses costing up to Rs 50 lakh aims to encourage investors to contribute to the rental housing supply. Furthermore, utilising government-owned land for regulated high-density rental housing development is recommended to ensure affordability and controlled market impact, Baijal said.
Making home purchases tax-efficient
The sector urges for an extension of the completion timeline for under-construction properties eligible for long-term capital gains benefit under Section 54 from three to five years. This recommendation takes into account the increasing scale of residential projects and potential delays in project completion.
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