The Budget 2019 that was announced on July 5 this year by the Finance Minister of India, Nirmala Sitharaman, contained major pointers about real estate and housing properties in India. The Government’s intent to create “Affordable Housing to All by 2022” was the main area of focus in this regard. Apart from detailing the various tax benefits that can be availed on various house loans, the introduction of the Pradhan Mantri Awas Yojana (PMAY) was also highlighted in the Union Budget 2019 speech. Following are a few details about the move:-
Housing Made Affordable
The Budget proposed several changes related to the tax provisions for availing a home loan. Some of the key proposals highlighted in the budget include the following-
Earlier, tax deductions were only limited to INR. 2 lakhs on home loan interests. However, as per the new budget, borrowers can now enjoy interest deductions up to INR.3.5 lakh under the affordable housing goal.
The developers who are aiding the government in providing affordable housing can now enjoy a tax holiday on their profits.
The interest paid on home loans for self-occupied properties is now allowed tax deductions up to INR.2 lakhs.
Any home loan borrowed up to 31st March 2020 that is valued up to INR 45 lakh can enjoy further deductions up to INR.1.5 lakhs on its interest.
The profits gained by selling the residential property to invest in startups would also be permitted to get capital gains exemption up to 31st March 2021.
The limit on the cost of houses is raised to INR. 45 lakh in order to align the definition of affordable housing with the existing GST acts. In the same regards, the Finance Minister has further proposed to increase the carpet area limit from 30 sq.m to 60 sq.m in metro regions and 60 sq.cm to 90 sq.cm in non-metro regions.
All these provisions have been introduced with an aim to attract a large number of first-time homebuyers. These provisions make availing a home loan more affordable and tax-friendly.
The Pradhan Mantri Awas Yojana
The Pradhan Mantri Awas Yojana is a unique initiative by the Government of India that aims to provide affordable housing to the economically weaker section of our country. The scheme is divided into two components-
Pradhan Mantri Awas Yojana- Urban (PMAY-U)
Pradhan Mantri Awas Yojana- Gramin (PMAY-G)
The PMAY scheme aims to provide affordable housing to nearly 20 million families under these components by the year 2022. The primary beneficiaries of these schemes would be people belonging to the Economically Weaker Section (EWS), Low Income Groups (LIGs) and Mid-Income Groups (MIGs). People belonging to these economic sections will be given a subsidy on their home loan. The rate of this subsidy may vary depending on the type of income bracket they fall under (EWS, LIG or MIG). Women applicants would be given priority under the PMAY scheme. Moreover, special provisions will also be made for widows, spinsters, individuals belonging to SC/ST group, and transgenders.
However, irrespective of the economic group, it is important that every Indian knows about the features of the government PMAY scheme. Below discussed are some key highlights of the PMAY-
Affordable housing for all by 2022
To elevate some of the most ignored demographics in the country such as people living below the poverty line, people belonging to minorities, differently abled individuals, etc.
Strict provisions to register at least one female member of the family to be the co-owner of the property.
Interest deductions under PMAY
Under the credit linked subsidy scheme (CLSS) of the PMAY program, eligible borrowers can enjoy a 6.5% subsidy on their home loan interest for a period of 20 years. Thus, beneficiaries can enjoy a maximum subsidiary of INR. 6lakhs on their home loan amount.
Achievement Status in PMAY-G and PMAY-U
The PMAY-G scheme is already in its second phase. As many as 1.95 crore houses are expected to benefit from the PMAY-G scheme. These beneficiaries are chosen across the Indian states, with a special preference given to Left Wing Extremists (LME) districts. The primary aim is to replace all the ‘kuccha’ (temporary) houses in these rural areas. Apart from providing affordable housing to the rural population, PMAY-G also aims to provide basic amenities like LPG gas connections, water-pipe lines, electricity, toilet facilities, etc. in these areas.
Most urban cities in India are facing a shortage of space due to the large influx of the rural population that has migrated to these regions for better prospects. This has led to an increase in the number of slum dwellings in these regions. The high population density in these urban cities has also started causing a strain on basic amenities leading to issues such as water shortage and sanitation problems. However, the PMAY-Urban scheme aims to change this scenario by the year 2022.
The PMAY Urban has been implemented with 4 key objectives for providing affordable housing in urban cities and towns across India. These include-
In-Situ Slum Redevelopment
Affordable housing through CLSS
Affordable Housing through Partnership
Subsidiary for beneficiary-led individual house construction
The Government’s target to provide affordable housing for all seems considerably achievable with the successful implementation of these schemes. The subsidy provided on the home loan interest rate is likely to increase the inclination of borrowers to avail affordable home loans at a large scale. The tax benefits on the home loans are further expected to increase the interest of the mid-income segment to avail the home loan facility.
To know more about the other highlights of Union Budget 2019 and how to apply for PMAY, get in touch with our financial experts at Finserv Markets. Finserv Markets is your one-stop destination for all the financial products like loans, insurance and investments. Under the PMAY scheme, borrowers can avail a subsidy on their Bajaj Finserv Home Loan. Moreover, Finserv Markets is also offering an additional benefit to first-time applicants with up to 6.93% subsidy on interest rates and EMIs. To know more about the scheme and your eligibility to qualify for the Bajaj Finserv Home Loan, contact now!
Here is all you need to know about Pradhan Mantri Housing Scheme
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