Affordable housing gets push in Budget 

New Delhi, Feb 1, 2023:  Union finance minister Nirmala Sitharaman on Wednesday announced an outlay of ₹79,000 crore, an increase of 66 per cent towards the Pradhan Mantri Awas Yojana (PMAY).

In the previous budget, the Finance Minister allotted ₹48,000 crore for the completion of 84 lakh houses under PMAY. 

The Pradhan Mantri Awas Yojana, aims to address the housing shortage among the EWS/LIG and MIG categories. ‘Pucca’ houses, under the plan,  were to be provided to those eligible, by March 2022, which now stands extended till December 2024.

Among other announcements for the sector the Finance Minister recommended capping the capital gains deduction on residential property investment under sections 54 and 54F at 10 crore. 

The Budget suggested changing the guidelines for calculating capital gains in cases of joint property development to include the money received in the form of a cheque or other kind of payment. It also said that interest paid on borrowed capital for acquiring or improving a property can be claimed as deduction from income, subject to certain conditions, while it can also be included in the cost of acquisition or improvement on transfer, thereby reducing capital gains. “It is proposed to provide that the cost of acquisition or improvement shall not include the amount of interest claimed earlier as deduction,” said the FM.

The Budget also proposed to change the rules for calculating capital gains in cases of joint property development which will include money paid by cheque or another form of payment as consideration.

The Finance Minister also said like the RIDF, an Urban Infrastructure Development Fund, UIDF, will be established through use of priority sector lending shortfall. Managed by NHB, this will be used by public agencies to create urban infrastructure in Tier 2 and 3 cities. 

The Budget mentions that cities will be enticed to enhance their credit worthiness for municipal bonds by ring-fencing user charges on urban infrastructure and implementing property tax governance reforms.

The FM further added that, States and cities will be encouraged to undertake urban planning reforms and actions to transform our cities into ‘sustainable cities of tomorrow’, which implies efficient land resources usage, adequate resources for urban infrastructure, transit-oriented development (ToD), increased availability and affordability of urban land, and opportunities for all.