As FM Sitharaman gears up to present the Union Budget on February 1, 2021, sector wise expectations are high that she will announce policy reforms to boost the consumption and get the economy back on the track. Despite lowest ever home loan interest rates and fall in property prices of ready-to-move-in properties, the surge in demand for new Home Loans as high as liquidity infused by the RBI.

The contribution of real estate sector is close to 8% to the GDP. Also, real estate is one segment that can help support other ancillary sectors on the growth path. By incentivising new and existing home loan borrowers, government can boost demand & significantly help reduce the stress of real estate sector which was already crippled due to unsold inventory prior to COVID.

By introducing more tax sops and ensuring more cash is left in the kitty of each individual, FM will do a huge favour for the people who are already struggling to come on terms with loss of income and financial disruptions caused due to COVID pandemic and subsequent lockdowns.

Expectations of Home Loan Borrowers from Budget 2021

Credit linked subsidy under Pradhan Mantri Awas Yojana (PMAY)

Extend last date for availing Pradhan Mantri Awas Yojana (PMAY) Credit-Linked Subsidy Scheme (CLSS) for MIG-I & MIG-II in lines with LIG/EWS category to March 31, 2022. In present Covid stressed times, each home loan aspirant desires some saving. Presently the last date for MIG segment is March 31, 2021. PMAY CLSS is Rs 2,35,068 and Rs 2,30,156 for the MIG-I and MIG-II respectively.

Tax rebate on home loan interest repayment under section 24

Under Section 24 of the Income Tax Act, home loan borrowers get a tax deduction up to Rs 2 lakh on interest repayment for a self-occupied property. The home loan borrowers want extension in this limit.

Additional tax benefit under Section 80 EEA

According to the last update, the FM N Sitharaman had extended the tax benefit on interest payment for new borrowers of affordable units for home loans booked between April 1, 2019 to March 31, 2021. Under Section 80EEA, these borrowers were granted an additional deduction of up to Rs 1.5 lakh on home loan interest payment, over and above the existing deduction u/s 24. To avail the benefit, the value of unit should be Rs 50 lakhs or less and the loan amount should be Rs 35 lakhs or less.

To truly extend these tax benefits to the larger base of customers and boost the housing loans, the additional interest deduction should be offered to all units and the capping on value of property should be erased.

Some other expectations are expansion of tax relief under section 80C and uniform GST for builders of under construction units so as to boost housing in all. With lower costs, builders will be able to offer more affordable units to end customers and transfer the benefit to end user only.

FAQs

What is the date of Union Budget 2021?

Finance Minister N Sitharaman will present Union Budget 2021 on February 1, 2021 in the budget Session of Parliament at 11 am.  The Budget session commences on January 29 and will close on February 15. President Ram Nath Kovind will address both houses of the Parliament on January 29 prior the beginning of the Budget Session.

What is special about Budget 2021?

Budget 2021 will be presented by FM Nirmala Sithraman on February 1, 2021 digitally. This is the first ever digital budget presentation. Also, the budget will address contracted GDP for the first time in the history of Independent India.

What was the theme of the Union Budget 2021?

The theme of Union Budget 20-21 was ‘Ease of Living.’

What are the top expectations from budget 21-22?

After disruptions caused due to COVID in FY 20-21, the key expectations from budget 21-22 are the boost to demand and consumption, thereby driving sustainable road map for intra sector growth for good of overall economy.

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