India: Government mulling budget sops to put its house in order

  • The government is contemplating measures to boost the housing sector in the budget, seeing this as a quick way of providing an impetus to the slowing economy and creating more jobs.
  • The steps under consideration include a bigger tax benefit to encourage purchases, softer interest rates for affordable housing and restoring some benefits for a second house.
  • Policymakers are eyeing measures to reverse the economic slowdown and housing is seen as one of the potential sectors that can aid the process. India’s GDP slowed to a five-year low of 6.8% in FY19.
  • The Narendra Modi-led government had raised the maximum deduction from income for interest paid on a loan for self-occupied house from INR0.15mn to INR0.2mn in its maiden budget in Jul 14.
  • Tax experts said removal of restrictions and reverting to the previous regime will provide relief to taxpayers as the primary investment of most of Indians is in real estate.

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