Housing for middle class: New scheme announced by FM in Budget 2024
Affordable housing in interim budget 2024: According to the Finance Minister budget speech, the government will announce a new scheme for middle class to build or buy their own houses. The new scheme will help the middle class living in rented houses, or slums, or chawls and unauthorized colonies to own a house.
The Finance Minister Nirmala Sitharaman has announced a new scheme in her interim budget 2024 speech. As per the budget speech, "Our Government will launch a scheme to help deserving sections of the middle class “living in rented houses, or slums, or chawls and unauthorized colonies” to buy or build their own houses."
Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd. says, " Finance Minister underscored the government's recognition of the significance of homeownership. In a notable announcement, the FM stated a housing scheme would announce soon targeting the middle class, extending to those residing in rented houses with the aim of facilitating the construction or purchase of their own homes. This initiative is expected to revitalize the Mid housing & Affordable housing sector."
This is not the first time that the government has given a push to affordable housing. The government has launched various schemes and deductions under the Income-tax Act 1961 to ease the income tax burden on affordable housing buyers.
Section 80EE deduction for first-time homebuyers
A deduction under Section 80EEA was introduced in Budget 2019 for affordable housing. It allows additional deduction of Rs 1.5 lakh on the interest paid on housing loan, subject to certain conditions. Section 80EEA deduction is available over and above the deduction of Rs 2 lakh under Section 24. Hence, an eligible taxpayer was allowed to claim deduction of Rs 3.5 lakh on the interest paid on housing loan.
To claim Section 80EEA deduction, an individual was required to satisfy the following conditions:
a) The stamp duty value of the property must not exceed Rs 45 lakh
b) The taxpayer should not own any residential property on the date the loan is sanctioned
c) The home loan must be taken between April 1, 2019, and March 31, 2022
d) The loan must be taken from a financial institution
e) The individual must not be eligible to claim deduction under Section 80EE
Pradhan Mantri Awas Yojana (PMAY) - Housing for All
Apart from the tax deductions mentioned above, the government also launched the PMAY scheme under 'Housing for All' campaign. The scheme provided a specified subsidy on home loan interest for up to Rs 2.67 lakh to various categories of homebuyers. The Economically Weaker Section (EWS)/Low Income Group (LIG), Middle Income Group - I (MIG-I) and Middle Income Group-II (MIG-II) were eligible for the scheme.
An interest subsidy of 6.5%, 4% and 3% on loan amounts of up to Rs 6 lakh, Rs 9 lakh and Rs 12 lakh, respectively, are admissible. The carpet area of the house can be up to 60, 160 and 200 square metres for EWS/LIG, MIG I and MIG II, respectively. The benefit for EWS/LIG beneficiaries under credit linked subsidy scheme (CLSS) works out to as high as Rs 6 lakh over a loan period of 20 years.