Latest government announcements demonstrate that promoting affordable housing and using new construction technologies are now priorities for India.
Below is an overview of recent announcements from the Indian government to prioritize the development of affordable housing.
Discover the latest measures announced by the Indian government below:
Finance Minister Announces Measures for Promoting Affordable Housing and Real Estate Sector
The scheme for profit-linked income tax exemption for promoters of affordable housing scheme has been made more attractive. The Union Finance Minister Shri Arun Jaitley proposed a number of changes while presenting the General Budget 2016-17 :
- Instead of counting the built-up area of 30 and 60 sq.mtr., it will be the carpet area of 30 and 60 sq.mtr. of the houses
- There would be a 30 sq.mtr. limit which will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 sq.mtr.
- Extend the completion period of the building of the houses after commencement under the Scheme from the present 3 years to 5 years.
At present, the houses which are unoccupied after getting completion certificates are subjected to tax on notional rental income. For builders for whom the constructed buildings are stock-in-trade, Shri Jaitley proposed to apply this rule only after the end of the year in which completion certificate is received so as to give the builders some breathing time for liquidating their inventory.
In his Budget Speech, the Finance Minister Shri Jaitley also proposed to reduce the holding period for considering gain from immovable property to be long term from the present 3 years to 2 years and the base year for indexation to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property. The Minister said that this move will significantly reduce the capital gain tax liability while encouraging the mobility of assets. Shri Jaitley added that his Government also plan to extend the basket of financial instruments in which the capital gains can be invested without payment of tax. For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed.
For the new capital for State of Andhra Pradesh which is being constructed by innovative land-pooling mechanism without use of the Land Acquisition Act, the Union Finance Minister proposed to exempt from capital gains tax all persons who were holding land on 2.6.2014 - the date on which the State of Andhra Pradesh was re-organised - and whose land is being pooled for creation of capital city under the Government Scheme. If you would like to read the press article or watch the video about this annoucement, please click here.
National Housing Bank will refinance individual housing loans of about Rs. 20,000 Crore in 2017-18
The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley while presenting the General Budget 2017-18 in Parliament today said that affordable housing will now be given infrastructure status, which will enable these projects to avail the associated benefits. The National Housing Bank (NHB) will refinance individual housing loans of about Rs. 20,000 crore in 2017-18. Thanks to the surplus liquidity created by demonetisation, the Banks have already started reducing their lending rates, including those for housing. The Finance Minister Shri Jaitley in his Budget Speech said that in addition, interest subvention for housing loans has also been announced by the Prime Minister.
80% percent of financial allocations for housing and other military infrastructure projects will be spend in making houses with the use of new construction technologies such as pre-cast and pre-engineered structures.
Defence Ministry is going to push the usage of new construction technologies in a big way and a very large chunk of its total allocations for housing and other military infrastructure projects of Rs. 24, 000 crores would be used for the adoption of pre cast and pre engineered structures, Major General Sanjeev Jain, Director General, Directorate General of Married Accommodation Project (DGMAP), Military Engineering Service (MES) said, read more here.
