On February 1, 2022, Union Finance Minister Nirmala Sitharaman delivered the critical Union Budget 2022. A budget is a disclosure of the government’s expected receipts and expenditures for that specific year, according to Article 112 of the Constitution of India, 1949. The budget must prioritize vital employment, public health, MSME growth, and aggregate demand generation. However, with an increase in COVID cases across the country, this year’s Union Budget was likely to lay forth a path for India’s economic rebirth. The Finance Minister’s address is expected to outline policies and initiatives to strengthen the country’s financial sector. And, just as investors, the automobile industry, salaried workers, and others have high hopes for Budget 2022, so does the housing and real estate industry.
So, what were people hoping to see in the budget for 2022?
The increased interest deduction benefit under Section 80EEA has been extended for the following year.
This currently available incentive for first-time homebuyers, which allows them to deduct an additional 1.5 lakh off their home loan interest payments, will expire on March 31, 2022. When interest rates on house loans are at or near historic lows, the government should prolong the Section 80EEA benefit for another year. This would further encourage potential homebuyers in the low- and middle-income segments to take out a home loan to achieve their ambition of owning a home, providing a much-needed boost to the housing and real estate sectors.
The prohibition on deducting a loss from the residential property has been removed.
The 2017 Finance Bill included measures limiting the set-off of losses from residential property against other sources of income to a maximum of $2 lakh per year.
The abolition of this threshold, which will allow individuals to claim the entire interest on their let-out property without limitation in the current economic climate, could boost investor sentiment in the housing market. This will also increase the property’s effective post-tax return.
Allow a separate provision for home loan principal repayment or raise the limit under Section 80C.
The Section 80C deduction of 1.5 lakh for a home loan principal repayment is frequently insufficient. The government can change a dedicated tax statutory requirement for principal repayment instead of putting it under the already populated Section 80C, increasing the demand for homebuyers to take out home loans to purchase the property.
Alternatively, they can raise the overall Section 80C limit from the current limit of 1.5 lakh. It’s also worth noting that the government accelerated the expense limit in this section for the last time in 2014. As a result, now is the ideal time to address this issue and raise the overall limit. The principal repayment under this section will benefit the housing sector and increase the contribution of insurance and investment under Section 80C.
Continuation of CLSS of EWS / LIG / MIG
The MIG segment may benefit from the CLSS program until March 31, 2021, and the EWS and LIG components may help until March 31, 2022. The housing and real estate industry expects the government to extend this profit for another year at all income levels. Continuing the benefits of the CLSS program for another year will provide affordable homebuyers and middle-income buyers with an economical range to buy Flats in Jodhpur.
Change the definition of affordable housing to include more buyers.
As per the Ministry of Housing and Urban Poverty Mitigation, affordable housing units in cities and towns can no longer exceed 90 square metres of carpet area and 60 square metres in large cities. The cost of owning a home cannot exceed 45,000 rupees in either case. These criteria appear valid for cities with adequate housing stock and cost limits, but they also apply to homebuyers in more expensive cities like Mumbai.
As a result, governments need to rethink city-specific pricing parameter revisions to reach a more extensive customer base. Increasing the ticket size from 45,000 to about 75,000 will allow most homebuyers to benefit from this provision of affordable homes. This will allow more homebuyers to enjoy various benefits, including lower GST tax rates, government subsidies, and tax deductions of up to Rs 35,000 (based on Sections 24 and 80 EEA) on mortgage interest repayments.
Over the past year, the real estate sector has made a strong comeback, home sales in major cities have reached 90% of pre-pandemic levels, and newly launched units are above 2019 levels. Much is expected, but one of the most promising announcements is an income tax deduction of Rs 50,000 on mortgage interest. This is a massive benefit for homebuyers and can help boost demand for residential real estate. The third wave may have created uncertainty, but expectations for future budget updates on these trends are high, and the sentiment is unlikely to diminish immediately. This shows that this is the appropriate time to invest in Property in Jodhpur.
The housing sector expects additional support, and the main demands for industrial status, easy access to public finances and tax cuts.