The housing sector will get a boost as the Union Budget has proposed to increase the deduction limit on account of interest on loan in respect of self-occupied house property from ₹1.5 lakh to ₹2 lakh.

In his maiden budget speech, Finance Minister Arun Jaitley said, “Housing continues to be an area of concern for middle and lower middle class due to high cost of financing.

“Therefore, to reduce this burden, I propose to increase the deduction limit on account of interest on loan in respect of self occupied house property from ₹1.5 lakh to ₹2 lakh.”

With credit offtake being tepid on the corporate side, banks have been pushing housing loans in a big way in the last couple of years. Year-on-year, banks reported a 17 per cent increase in home loans to ₹5,55,800 crore as at May-end 2014 as against ₹4,75,900 crore as at May-end 2013.

Low cost affordable housing

Jaitley said Government is committed to endeavour to have housing for all by 2022 by extending additional tax incentive on home loans to encourage people, especially the young, to own houses. In this regard, the minister said a Mission on Low Cost Affordable Housing to be anchored in the National Housing Bank is proposed to be set up.

A sum of ₹4,000 crore has been earmarked for National Housing Bank with a view to increase the flow of cheaper credit for affordable housing to the urban poor/Economically Weaker Sections/Low Income Group segment.

Jaitley added that Government has already outlined some other incentives such as easier flow of FDI in this sector and is willing to examine other positive suggestions.

He also informed the Lok Sabha about the inclusion of slum development in the list of Corporate Social Responsibility (CSR) activities to encourage the private sector to contribute more towards this activity.

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