Builders in Gurugram now hope to cash in on affordable housing

Gurugram: The tax sops and impetus given by the government on the affordable housing has resulted in builders now cashing in on the new category. It is expected that in the next two years the population of the city is going to increase by three lakh. Nonavailability of affordable houses has given way to illegal colonies that continue to thrive in the city.

In a move to boost affordable housing segment Finance Minister Nirmala Sitharaman on Friday raised tax deduction limit to Rs 3.5 lakh on interest paid on housing loan sanctioned during this financial year for the purchase of first home worth up to Rs 45 lakh.

In order to align the definition of affordable housing under the Income Tax Act with GST Acts, Sitharaman proposed to increase the limit of carpet area from 30 square metres to 60 square metres in metropolitan regions and from 60 square metres to 90 square metres in non-metropolitan areas. The cost of the affordable house has been fixed at Rs. 45 lakh and below.

The Finance Minister said the interest paid on housing loans is currently allowed as a deduction to the extent of Rs 2 lakh. Taking cognisance of the huge unsold inventory of the builders, the government in its last budget extended the period of payment of notional tax from one year to two years that remain unchanged.

It was also stated by Sitharaman that the public officials have already begun finding solutions on how the tax mechanism in the sale and purchase of real estate assets can further be simplified. There were also no changes in the notional rent.

Notional rent is applicable to the second house if someone has more than one house, has been waived off, considering the needs of citizens who migrate to for job opportunities, as well as those who have to maintain two houses for family reasons.