Jun 10, 2023

The Union Budget and Affordable Housing: What You Should Know

by Godrej Properties Limited

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Promoting Affordable Housing for a Sustainable Future

Affordable housing is a critical component of any thriving society, and the Union Budget plays a vital role in promoting and supporting this sector. If you are interested in affordable housing or planning to invest in this segment, it is essential to understand the implications of the Union Budget. This blog overviews the Union Budget's focus on affordable housing, key initiatives, and their impact on homebuyers, developers, and investors.

Pradhan Mantri Awas Yojana (PMAY)

The Pradhan Mantri Awas Yojana (PMAY) is a flagship affordable housing scheme launched by the government. Under this scheme, the government provides financial assistance, subsidies, and incentives to eligible beneficiaries. Beneficiaries include economically weaker sections and low-middle income groups.

Tax Benefits for Affordable Housing

The Union Budget introduces tax incentives for affordable housing, including interest subsidies for homebuyers through schemes like CLSS. These subsidies reduce the effective interest rate, making homeownership more affordable. Income tax deductions and exemptions are available for homebuyers in the affordable housing segment, including deductions on home loan interest payments (Section 24) and principal repayment (Section 80C).
 

Financing Options and Incentives

The Union Budget prioritises financing options and incentives for affordable housing. It includes measures such as granting priority sector status to loans for affordable housing and ensuring adequate credit availability. Additionally, affordable housing projects may receive infrastructure status, enabling developers to access long-term and low-cost funding and promoting the development and investment in affordable housing.

Impact on Homebuyers, Developers, and Investors

The Union Budget's initiatives in affordable housing have significant implications for stakeholders. Homebuyers gain greater accessibility to affordable homes through subsidies, tax benefits, and improved financing options, promoting inclusivity. Developers benefit from incentives, infrastructure status, and increased financing opportunities, encouraging participation and contributing to sector growth. Investors can capitalise on the availability of incentives, infrastructure status, and growing demand for affordable homes, making it an attractive investment avenue.

Conclusion:

Embracing Affordable Housing Opportunities

The Union Budget's focus on affordable housing reflects the government's commitment to providing housing for all and creating a sustainable future. As a homebuyer, developer, or investor, understanding the implications of the Union Budget is crucial for making informed decisions and leveraging the opportunities in the affordable housing segment. With initiatives like PMAY, tax benefits, improved financing options, and incentives, affordable housing is poised to grow significantly.
 

Frequently Asked Questions

1. Are there any income criteria to be eligible for affordable housing schemes?

Ans: Yes, eligibility criteria vary across schemes and categories. Generally, these schemes target individuals falling under the economically weaker sections (EWS), low-income groups (LIG), and middle-income groups (MIG).

2. How can I avail of the interest subsidy under the Credit-Linked Subsidy Scheme (CLSS)?

Ans: To avail of the interest subsidy under CLSS, you must apply through participating banks or housing finance companies. The subsidy is linked to your loan amount, and the lending institution will guide you through the application process.