With the Rs.1 lakh deduction on interest rates on home loans up to Rs.25 lakh, the first time home buyers alone may benefit from the Budget 2013-14 which was presented in the parliament on Feb 28.
The much awaited Budget 2013-14 was presented in the parliament by the finance minister on Feb 28. This year the budget did not have many sops to the real estate sector as a whole.
However real estate sector will benefit from the budget as it includes deduction of interest in the home loans by the first-home buyers. Those who plan to buy home for the first time can gain tax exemption and deduction in the interest rates up to Rs.1 lakh.
This will have more effect on the middle income class and so the buyers of this class will have a reason to be happier.
As per P Chidambaram’s proposal all the buyers who wish to buy a home for the first time will be entitled a tax deduction of Rs.1 lakh on interest. The finance minister said that this will boost the housing demand in the real estate sector and give simultaneous growth to other industries like steel, cement, bricks and the likes which are related to real estate sector.
Once the construction gets the pace, more laborers also will be demanded and it will increase the job opportunities in the country.
His view was confronted by Anuj Puri who said that this will have impact only in tier-2 and tier -3 cities and not in any major cities. Jones Lang LaSalle India head added that this move is more targeted towards the middle income segment.
Anshuman Magazine, chairman and MD of CBRE South Asia opined that the deduction rate should have been on loans up to Rs.35 lakhs instead to create better impact on the housing sector.
NHB’s Chairman RV Verma said that this will boost the new launches and housing projects. The builders will be boosted to supply more fresh-homes to the people as the deduction is applicable mainly to the fresh home buyers.
Budget 2013-14 may have some negative impacts on the luxury housing segment or in fact it does not support the luxury housing sector at all. Already the housing sales are dipping in the cities and the real estate sector is facing sluggishness in sales. The builders hope that the pre-budget sales will be more than the current sales.