The government on Monday decided to extend the additional tax benefit of Rs 1.5 lakh on home loans for purchasing affordable houses by one year to March 31, 2022. The deduction under Section 80EEA of the Income Tax Act is applicable on the interest paid on loans, and is over and above the tax benefit of Rs 2 lakh available under Section 24B.

In her Budget speech, Finance Minister Nirmala Sitharaman announced that in order to promote supply of affordable rental housing for migrant workers, a new tax exemption will be introduced for the notified affordable rental housing projects.

Dhruv Agarwala, Group CEO of Housing.com, Makaan.com and Proptiger.com, said the government’s move will be an impetus to the residential property sector which has seen improvement in consumer sentiment after the start of the COVID-19 vaccination process.

“This move will augur well, especially for the affordable housing segment, which will also benefit from the decision to offer a tax holiday for affordable housing projects for one more year, to boost supply. The support for rental housing too will go a long way in boosting the real estate market and will ease a lot of pressure points in the rental home market. This will also help migrant workers to a great extent and will support them in remaining in metros and other big cities during times of financial hardships such as the one presented by the COVID-19 pandemic,” he said.

Anuj Puri, the Chairman of ANAROCK Property Consultants, said the “big boost to affordable housing and rental housing” was expected.

“This will keep the demand buoyant for affordable housing in 2021 as well. Further, the extension of tax holiday for affordable housing projects for one more year will help bring in more supply within this segment. As per ANAROCK Research, affordable housing accounts for more than 35 per cent of the supply across the top-seven cities in the country,” he said.

Aditya Kushwaha, CEO of Axis Ecorp, said the announcements made in the Union Budget with respect to the realty sector would not only improve the customer buying behaviour, but would also boost investments coming through the NRI route. “This move will also give a boost to holiday homes and commercial real estate in the country,” he said.