Its cheers for the affordable housing sector as the Finance Minister Arun Jaitely has announced a dedicated fund for the sector in the Union Budget. This move is likely to provide buoyancy to the sector.
Last week, the Goods and Service Tax (GST) Council recommended rationalisation of GST rates on various goods and services. The list included affordable and low-cost housing. GST would be charged at 8 per cent on the total value of under-construction properties, which would be 4 percentage points less than the earlier effective rate of 12 per cent.
Last year, the affordable housing segment had received industry status in the Budget and support from the Centre under the newly introduced regulation in the Pradhan Mantri Awas Yojana.
From the investor’s perspective, affordable apartments are easier and more profitable to sell or even let out, assuring decent return of investment. Urban India has a severe shortage of housing, yet Indian cities have many vacant houses.
According to the census of India 2011, out of the 90 million residential census units, 11 million units are vacant; that is about 12 per cent of the total urban housing stock consists of vacant houses.