The annual Budget is much waited. The common man whose personal finances have a close relationship with it await it with eager and anxious breath. In 2020, affordable housing aka the Pradhan Mantri Awas Yojana (PMAY) received a boost with an extension of home loan subsidy and increased outlay.
Extension of PMAY- CLSS Benefit
The Pradhan Mantri Awas Yojana is available to four income categories: Economically Weaker Sections (EWS), Lower Income Group (LIG), Middle Income Group 1 (MIG1) and Middle Income Group 2 (MIG2). In line with its vision of affordable housing for all by 2022, the government has provided these categories (first-time homebuyers) a credit-linked subsidy scheme (CLSS) where home loan borrowers receive a PMAY subsidy of up to Rs. 2.67 lakhs on the interest. Budget 2020 announced an extension of this home loan subsidy – EWS and LIG categories can avail benefits until March 31, 2022 while MIG1 and MIG2 categories can avail its up to March 31, 2020. Earlier, the CLSS for MIG was available until March 2019 for those meeting the Pradhan Mantri Awas Yojana eligibility for the category.
Extension of Section 80EEA Deadline
In the previous Budget, the government had announced an additional income tax deduction under Section 80EEA – up to Rs. 1.5 lakhs on interest payments on home loans. This benefit is over and above tax deduction of up to Rs. 2 lakhs under Section 24B (interest paid) and up to Rs. 1.5 lakhs under Section 80C (principal paid). The reason this is an important benefit is that the interest component remains high during the initial stages of a loan. This tax benefit will be available only to eligible homebuyers whose loan is sanctioned before March 31, 2020.
Additional Read: Budget 2020: Key Highlights and Takeaways
Boost to Affordable Housing
The Union Budget 2020 granted the Pradhan Mantri Awas Yojana Rs. 27,500 crores as against Rs. 25,328 crores in 2019-20, an increase of 8.5%. Moreover, affordable housing has been given infrastructure status, which means that developers can get cheaper loans. This will also increase demand in the sector.
The Finance Minister announced an extension in the additional income tax deduction of Rs 1.5 lakhs for interest on home loan for a house valued up to Rs. 45 lakhs. This period has now been extended by one year, up to March 31, 2021. Thus, the total tax deduction on the interest is Rs 3.5 lakhs for one more year. This move is expected to positively impact demand for affordable housing in India.
Under PMAY, the government has already sanctioned over 81 lakh houses (PMAY-Urban) and an additional 1.95 crore houses are to be provided under PMAY-Rural. In Budget 2020, CLSS allocation for urban areas has been decreased by almost 50% from 2019.
Additional Read: Budget 2020 Real Estate – Highlights
Know More About Pradhan Mantri Awas Yojana Subsidy
Visit Tata Capital home loan today to know all about the required eligibility and subsidy scheme of PMAY. Find complete information on the PMAY features and benefits. Learn how to apply for the unique Pradhan Mantri Awas Yojana today.