Budget 2016 – Bonanza For Affordable Housing

The budget 2016 presented by the Union Finance Minister Mr. Arun Jaitely on February 29th 2016 has been largely hailed as one which shall be beneficial for the real estate sector. Although many announcements will have positive implications for this ailing sector over a long period of time, but Affordable Housing is bound to reap great benefits very soon from this year’s budget.

The finance minister proposed total tax exemption on profits for developers who build small flats, besides service tax exemption for construction of affordable housing under state and central housing schemes. Builders will get 100% tax exemption on profits if they build apartments up to 300 sq ft in size in the four major metro cities and up to 600 sq ft in the non-metros, with a condition that these flats have to be built starting June 2016 and completed by March 2019.

Also, to make financing cheaper for first time home buyers, the FM has proposed deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned in 2016-17, where house cost does not exceed Rs 50 lakh. This move will further propel demand for low cost affordable housing projects.

In addition to benefits to buyers, the budget also proposes to increase the limit of deduction of rent paid under section 80GG from Rs 24000 per annum to Rs 60000, to provide relief to those who live in rented houses. This will help those who do not have their house, thus prompting them to go for genuinely priced affordable house.

The direct and indirect tax benefits for affordable housing is expected to catapult the smart-city initiative, as the government has also given many incentives for developing the road infrastructure too. Moreover the exemption of paying 17% dividend distribution tax (DDT) granted to Real Estate Investment Trusts (REITS), will also result in more investments in the housing sector, thus further reducing the prices of property.

These announcements will definitely assist in developing and delivering a greater number of affordable housing projects across the country, in sync with Prime Minister Narendra Modi’s vision of ‘Housing for All’ by 2022.


ROF Group

Plot No.80, 1st Floor, Sector-44, Gurgaon-122003

Tel: +91 124 4399 399

Email: info@rof.co.in


Leave a Reply

Your email address will not be published. Required fields are marked *