'Govt stimulus needed for affordable housing segment'

Budget 2021: Govt stimulus direly needed for affordable housing, says AM Estate Developers CEO

Representative image: iStock Photo

By Arun Malhotra,

The real estate sector contributes 8% to India's GDP and therefore, it has a few justifiable expectations from the 2021-22 budget. Let us understand what those expectations are. According to Section 24 of the Income Tax Act, the homeowners can get a rebate of up to Rs 2 lakhs on the home loan interest if the owners reside in the property.

The real estate sector expects the government to raise this ceiling to Rs 5 lakhs to attract more customers. Personal tax relief, either by tax rate reductions or amended tax slabs. The present GST rate for properties that are under construction is as follows:·       

 ▪️5% minus the ITC benefit for premium homes (> Rs 45 lakhs)
 ▪️1% for affordable homes(< Rs 45 lakhs)

Even if the government introduces a limited period GST cut, it would still boost the demand for under-construction properties. The capital influx from the buyers would allow the builders to finish their projects faster as well. More incentives for private sector investments in affordable housing.

Even though affordable housing is an important segment, the profit margins still remain low and therefore, a stimulus from the government is direly needed. The real estate sector has been dealing with several liquidity issues ever since the pandemic hit our shores. An urgent liquidity stimulus is needed by the government to prevent the sector from stalling.

(The author is the CEO of AM Estate Developers)