New Delhi: Union finance minister Nirmala Sitharaman’s first Budget brought cheer to many, and among them were homebuyers and the realty sector.

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The realty industry welcomed proposals to boost the housing sector, particularly affordable housing and rental housing, proposed in the Union Budget presented by Finance Minister Nirmala Sitharaman on Friday.

While the reforms in rental laws and the proposed model tenancy law sound promising, the tax deduction of Rs 3.5 lakhs on loans borrowed up to March 31, 2020 for homes valued upto Rs 45 lakh will boost the government’s Housing For All vision, say stake-holders.

(The deduction will be over and above the deduction of Rs 2 lakh allowed on a home loan interest payment. If one gets a home loan to buy or construct a house then the capital repayment and interest paid on the loan will fall under separate income tax sections.) While principal repayment qualifies for deduction under section 80C of the Income-tax Act, 1961 and has an overall limit of Rs 1.5 lakh a year, the interest payment on home loan qualifies for deduction under section 24(b) of the Act, with an overall limit of Rs 2 lakh a year.

“The government’s idea to provide affordable housing will be a possibility in almost all the cities – except Mumbai – where there is a paucity of land. I believe that the additional incentive of Rs 1.5 lakh on interest on loans borrowed under the affordable housing would give a boost to the real estate sector further,” NAREDCO President Niranjan Hiranandani said.

LIC Housing Finance Ltd. Managing Director Vinay Sah said the additional deduction of Rs 1.5 lakh on interest on home loans will trigger a strong demand from end-users in the affordable housing category.

Rental housing, which has not made much progress, has a strong potential in urban centres, and the move to bring regulation of Housing Finance Companies under the RBI will ensure consistency of regulatory environment and level playing field for both banks and HFCs, he added.

House of Hiranandani Founder-Director Surendra Hiranandani, welcoming many of the initiatives for the realty sector specially for Tier II and III cities, said that for stimulating growth, the government should impart “industry status” to the building industry.

With IANS inputs