Allowing a rebate on taxable income between Rs 2.5 lakh and Rs 5 lakh could finally give the much-needed boost to the country’s $200-billion real estate sector. In an effort to push the Prime Minister’s ‘Housing for All’ initiative, the government has announced a set of tax reforms for the real estate sector in the interim Budget 2019-2020.
Around 15.3 million houses have been constructed under Pradhan Mantri Awas Yojana (PMAY). “During 2014-18, 15.3 million houses have been built under PMAY,” Finance Minister Piyush Goyal said in his Budget speech. The flagship scheme has received an allocation of Rs 25,853 crore, compared to Rs 26,405 crore in 2018, about two per cent less than last year. “The reason for the decline is that most of the development in PMAY would now be organic, based on private players providing affordable housing. However, the allocation is enough for the government to go ahead with its own plans,” said a senior official in the Urban Development ministry. The mathematics Industry experts believe that increase in disposable income would finally help in adding more homebuyers in the affordable housing segment, which in turn might be the much-needed shot in arm for the real estate segment, especially in north India.
According to industry experts, if a person earns Rs 6.5 lakh per annum and is paying taxes, then effectively he is eligible for a loan of Rs 2 lakh per annum (banks consider 40 per cent of the salary for servicing loans) over a period of 20 years.