Reduced Interest On Housing To Benefit Odisha
The union budget has made housing affordable by introducing the provision for an additional deduction of Rs 1.5 lakh on the interest paid on loans, borrowed up to March 31, 2020, for purchase of affordable houses up to Rs 45 lakh. Statistically, the overall benefit of around Rs. 7 lakh will be availed over a loan period of 15 years.
On July 5, Finance and Corporate Affairs Minister Nirmala Sitharaman presented her maiden Union Budget before the Parliament. Sitharaman stated no changes in personal income tax rates but imposed an additional surcharge on the super-rich. The Budget focused on the growth of the economy with a reduction in corporate tax and emphasis on the housing sector, start-ups and electric vehicles.
The earlier interest exemption on housing was 2 lakhs which has now been increased to up to Rs 3.5 lakhs as proposed in the Union Budget 2019-20. According to the Chairman of the Odisha chapter of Confederation of Real Estate Developers’ Association of India (CREDAI) DS Tripathy, this is proving to be beneficial for the middle-class people seeking affordable housing.
In non-metro cities like Bhubaneswar, the benefit of the budget is applicable for a house that costs within Rs 45 lakh having a carpet area of 90 sq metres, while in metro cities the cost remains the same but the carpet area is reduced to 60 sq metre.
Other benefits include:
- 100% tax exemption for a housing project that has a minimum of 60% of houses with 60 sq metre carpet area.
- Up to 35% exemption in taxes to housing beside a commercial area
“With effective interest coming down, it will increase eligibility for mid-income housing segment. Though interest deduction has been allowed till March 2020 in the current budget, it will be extended in next financial years to boost residential sales,” Tripathy said.
Property owners in Odisha anticipate that the new reforms in rental housing would provide much-needed protection to those who are afraid to rent out their property apprehending forceful possession by occupants.
“If proper protection is given, people will start buying more property to rent it out and generate income without any fear,” said Prasanta Jena, a property dealer.