Home Expectations from Modi 3.0 First Budget
Increase in Home Loan Interest Rate Rebate
One of the most anticipated measures is enhancing the tax rebate on home loan interest under Section 24 of the Income Tax Act. The current limit of ₹2 lakh is expected to be increased to ₹5 lakh. This increase aims to provide significant relief to homebuyers by reducing their taxable income, thus lowering their overall tax liability. By making home loans more affordable, this measure is designed to stimulate housing demand, especially for budget homes, which have experienced a slowdown in sales since the pandemic. For many middle-income families, this could make the dream of owning a home more achievable.
Affordable Housing Boost
The budget is also expected to introduce significant benefits and tax breaks to promote the development and purchase of affordable housing. In expensive cities like Mumbai, the current qualifying cost for affordable properties under the Pradhan Mantri Awas Yojana (PMAY) is set at ₹45 lakh, which many consider too low given the high property prices. There is a strong push to raise this limit to ₹65 lakh to better reflect the market realities and ensure more people can benefit from the scheme. Additionally, there are calls for increasing the interest subsidies available under PMAY, making it easier for first-time homebuyers to afford a house.
Enhancement of Tax Benefits for Homebuyers
One expectation is to raise the deduction limit under Section 80C for principal repayments on home loans from the current ₹1.5 lakh to ₹2.5 lakh. This increase would provide substantial relief and encourage more individuals to invest in property. Additionally, more incentives for affordable housing projects are essential to stimulate both supply and demand. Simplifying the GST framework and reintroducing the input tax credit for developers could lower construction costs and improve affordability. The continued focus on infrastructure development, with high allocations for railways and urban rejuvenation projects, can further boost real estate values and attract investments.
Allocation to SWAMIH Fund
Another crucial expectation is the increase in allocation to the Special Window for Completion of Affordable and Mid-Income Housing Projects (SWAMIH) fund. The fund was created to provide last-mile funding for stalled housing projects, ensuring their completion and delivery to homebuyers. An additional corpus of ₹50,000 crore is suggested to help resolve ongoing issues with delayed projects and to enhance liquidity in the real estate sector. This move is expected to provide much-needed relief to developers and ensure that homebuyers receive their homes on time, reducing financial stress for both parties.
