FM proposed an additional Rs 50,000 deduction on interest on loans for first-home buyers and tax incentives on development of affordable housing.
The government also exempted from service tax construction of affordable houses up to 60 sq metres under any scheme of the central or state government including PPP schemes.
The finance minister in his budget speech said: “For the ‘first-home buyers’ I propose to give deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned during the next financial year, provided the value of the house does not exceed Rs 50 lakh”.
At present, Rs 2,00,000 deduction is allowed for interest paid on home loans.
The FM proposed 100 per cent deduction for profits to an undertaking from a housing project for flats up to 30 sq metres in four metros and 60 sq metres in other cities.
The deduction would be applicable on the projects approved during June 2016 to March 2019, and completed within three years of the approval. Minimum alternate tax (MAT) will, however, apply to these undertakings.
“Another proposal to stimulate housing activity is to facilitate investments in Real Estate Investment Trusts (REITs). I propose that any distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to dividend distribution tax,” Jaitley said.
In September 2014, market regulator SEBI had notified norms for listing of REITs that would help attract more funds in a transparent manner into the real estate sector.
REITs, which can be listed on stock exchanges, would help channelise both domestic and overseas investments into commercial real estate projects.
Service tax on construction of affordable houses up to 60 sq metres under any scheme of the central or state government including PPP schemes.
FM extended excise duty exemption, presently available to concrete mix manufactured at site for use in construction work at such site to ready mix concrete.
The deduction of interest payable on capital borrowed for acquisition or construction of a self-occupied house property would be allowed if such acquisition or construction is completed within five years.