Budget gives infra status to affordable housing, pledges to build 1 cr rural houses by 2022

MUMBAI|BANGALORE: Finance minister Arun Jaitley has proposed infrastructure status for affordable housing and other steps, including a pledge to build one crore rural homes in two years to help provide housing for all by 2022.

This will help affordable home developers access cheaper institutional funds and tax exemptions to improve margins, along with increasing supply. The Budget also offers tax incentives for affordable housing based on carpet area and not built-up space, which will help buyers get bigger-sized homes.

“We could not have hoped for anything better. The realty sector is thankful to the government for understanding the need to enable efficient supply of housing stock,” said Getamber Anand, president of Credai, which represents real estate firms.


The new credit-linked subsidy scheme for middle income groups with Rs 1,000 crore allocation is expected to enable access to cheaper capital. Given the government ’s thrust, flow of institutional funding to affordable housing is likely to rise.

“Giving infrastructure status opens up a lot of avenues to raise capital domestically from insurance companies and pension funds,” said Sunil Rohokale, CEO of ASK group.

“With 80IB benefits continued for next five years commercially, projects are more viable.” National Housing Bank has been allocated Rs 20,000 crore to refinance home loans while Pradhan Mantri Awas Yojana gets Rs 23,000 crore.

“Promoters of affordable housing projects will benefit from proposal of two-year extension from the earlier timeline of three years,” said Anuj Puri, country head, JLL India.

Help for builders with homebuyers in mind

The Budget offers a one-year tax break upon getting completion certificate, allowing developers time to sell stock and reducing litigation on notional income from such assets. Extending point of taxation on joint developments to project completion is likely to ease land prices and thereby house prices. Buyers are exempt from long-term capital gains tax if they sell property after 2 years.