The latest budget offers any person taking a home loan of up to Rs 25 lakh for a first home an extra tax deduction on interest of up to Rs 1 lakh.
Currently, tax payers are allowed to adjust interest payments up to Rs 1.5 lakh against their taxable income in one financial year but home sales have dipped due to of high prices, interest rates and a poor economic climate.
To improve the demand for budget and affordable homes and to kickstart the economy, the Budget also proposes to have an Urban Housing Fund under the National Housing Bank. It will have an initial allocation of Rs 2,000 crore in 2013-14. The budget gives an additional Rs 6,000 crore for the Rural Housing Fund.
The budget reduces the abatement on service tax — availed of by real estate developers — from 75% from 70%. It applies to homes above 2,000 sq ft or costing more than Rs 1 crore.