Incentives for Home-buyers in Budget 2016-17
The union budget for 2016-17 has some welcome measures for the real estate sector. Given that the real estate sector is one of the foremost drivers of growth in the country both as a employment generator as well as providing the populace with one of the most basic human needs – shelter, the government has tried to offer various incentives to both consumers as well as the developers of real estate projects. This should make buying and developing real estate a very attractive avenue in the coming financial year.
To begin with, the consumers especially the first home buyers have plenty to cheer about from the budget. The consumers can continue to enjoy all the previous year’s tax deductions even in the coming financial year. Additionally, a further tax deduction of Rs. 50000 will now be made available to provide added incentive to home buyers.
“In furtherance of the goal of the government of providing ‘housing for all’, it is proposed to incentivise first-home buyers availing home loans, by providing additional deduction in respect of interest on loan taken for residential house property from any financial institution up to Rs 50,000,” the Finance Minister Mr. Arun Jaitley said in his budget speech.
Although, this has been capped for homes valued at less than Rs. 50 lakhs and on home loans no greater than Rs. 35 lakhs – this should still be a very welcome move for many in the affordable housing segment. Thus the total deductions that can be claimed now are in the region of Rs. 2 lakhs per annum – a substantial increase from the previous financial year.
There is further good news for people living in rented accommodation and looking to buy a new home in the next financial year. Not only do they have the option of availing additional tax benefits as stated above, but they also have an added advantage in the form of expanded HRA deductions. People living in rented homes can now take a total deduction of Rs. 60000 per annum as House Rent Allowance, which should result in further tax savings. Both these measures put together offers a much needed and much appreciated stimulus into the hands of the prospective home buyers.
Additionally, in the affordable housing segment the government has decided to abolish service tax for homes which have a carpet area of 60 square meters currently being developed under any of the state or centrally-aided housing schemes. This move is expected to bring down the prices in the overall affordable homes segment.