Finance minister Nirmala Sitharaman presented the Union Budget 2019-20 of the Narendra Modi government in its second term on July 5. While presenting the Union Budget 2019-20, Finance minister Nirmala Sitharaman said,
“Our economy was at approximately US$ 1.85 trillion when we formed the Government in 2014. Within 5 years it has reached US$ 2.7 trillion. The Indian economy will grow to become a 3 trillion dollar economy in the current year”.
We give you an insight into the major announcements in the Union Budget 2019-20 for real estate sector:
Rs 1.5 lakh Additional Income Tax deduction on Home Loan
In a move to boost the affordable housing segment, the finance minister has increased the tax exemption limit on interest paid on the home loan. While presenting her first Union Budget 2019-20, Sitharaman said,
“For the realisation of the goal of ‘Housing for All’ and affordable housing, a tax holiday has already been provided on the profits earned by developers of affordable housing.”
Sitharaman proposed an additional deduction of up to Rs 1.5 lakh for interest paid on home loans borrowed up to March 31, 2020, for purchase of an affordable housing valued up to Rs 45 lakh. With that, a middle-class home buyer purchasing an affordable home will now get an enhanced interest deduction of up to Rs 3.5 lakh while translating to a benefit of around Rs 7 lakhs for borrowers, for a 15 year period of home loan.
By increasing the deduction limit in home loans, the central government has made home loans attractive and EMIs cheaper for a middle-class home buyer. Now a common man will show his interest in the affordable housing sector. Not only this, even banks and realty developers will enjoy the benefit from such a move.
Govt aims to build 1.95 cr houses under PMAY-Gramin (PMAY-G)
The government aims to achieve the objective of “Housing for All” by 2022. Under PMAY Gramin, Sitharaman informed that a total of 1.54 crore rural homes have been completed in the last five years. FM Sitharaman announced that in the second phase of PMAY-G, during 2019-22, 1.95 crore houses would be made available for the eligible beneficiaries. These houses will have amenities like toilets, electricity and gas connections. The good news here is that with the use of new-age technologies such as direct benefit transfer (DBT) platform, the average number of days for completion of houses under PMAY have reduced drastically from 314 days in 2015-16 to 114 days in 2017-18.
A big push for infrastructure growth
Infrastructure has found its way into the Union Budget 2019-20. The government has given a massive push to different forms of physical connectivity through Pradhan Mantri Gram Sadak Yojana, dedicated freight corridors, industrial corridors, Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes. Presenting the Budget for 2019-20 in the Lok Sabha, Sitharaman said 1.25 lakh km of village roads across the country will be upgraded under phase three of the Pradhan Mantri Gram Sadak Yojana (PMGSY). Budget 2019-20 has allocated Rs 80,250 for infrastructure, a sector the government considers the lifeblood of the economy.
The Model Tenancy Law to boost rental housing
“Several reforms would be undertaken to promote rental housing as the current rental laws are archaic and they do not address the lessor-lessee relationships fairly,” said Sitharaman.
This budget 2019-20 infused cheer among those living on rent as the Finance Minister (FM) Nirmala Sitharaman in her first budget proposed new reforms under the Model Tenancy Law to promote rental housing and increase the interest of investors, who are looking for rental income. Model norms would be finalised and would be circulated to the States.
RBI as a regulator of the housing finance sector
“The NHB, besides being a refinance and lender, is the regulator of the housing finance sector. This gives a somewhat conflicting and difficult mandate to the NHB,”
Finance Minister Nirmala Sitharaman said in her first Union Budget. So far, the National Housing Bank (NHB) was in charge.