Nirmala Sitharaman also focused on reforming tenancy laws and said a model tenancy law will be circulated

Finance Minister Nirmala Sitharaman's proposal to increase tax deduction limits on interest paid on housing loans by Rs 1.5 lakh is likely to bring some cheer into the lives of first-time homeowners. The deduction, which now stands at a total of Rs 3.5 lakh, is applicable on loans sanctioned during the current fiscal year and for home worth up to Rs 45 lakh.

"This will translate into a benefit of around Rs 7 lakh to the middle-class home buyers over their loan period of 15 years," she said.

The proposal was one of several suggested by the finance minister in a bid to boost the affordable housing segment.

"In order to provide a further impetus, I propose to allow an additional deduction of up to Rs 1.5 lakh for interest paid on loans borrowed up to March 31, 2020 for purchase of an affordable house valued up to Rs 45 lakh," Nirmala Sitharaman explained.

The budget also proposed an increase in the limit of affordable housing carpet area - from 30 square metres to 60 square metres in metropolitan regions and from 60 square metres to 90 square metres in non-metropolitan areas

Nirmala Sitharaman also focused on reforming tenancy laws and, in a proposal likely to please renters, said a model tenancy law would soon be circulated to the states.

Speaking to NDTV after the budget was read out, Priyanka Mullick, a media professional living in Mumbai, welcomed the proposals. She described the process of looking for rental accommodation in Mumbai as "one of the most difficult situations".

"Currently I am living in a flat in Andheri which is the fifth rented apartment in three years. Obviously the first time I had to leave my house was not by choice... House hunting is one of the most difficult situations an outsider has to go through in this city and the person who said finding god and finding the right house in Bombay is the same, said the right thing," she said.

Ms Sitharaman also announced that under the Pradahan Mantri Awas Yojana-Gramin (PMAY-G), which aimed to achieve its "Housing For All" objective by 2022, 1.95 crore homes would be made available to eligible beneficiaries.

According to the finance minister, these will be equipped with amenities like toilets, electricity and LPG connections.

Meanwhile, the Pradhan Mantri Awas Yojana-Urban (PMAY-U) has been given Rs 6,853.26 crore as against Rs 6,505 crore in 2018-19.

"Under the Pradhan Mantri Awas Yojana (Urban), over 81 lakh houses with an investment of about Rs 4.83 lakh crore have been sanctioned of which construction of about 47 lakh houses has started," Ms Sitharaman said, adding, "Over 26 lakh houses have been completed of which nearly 24 lakh houses delivered to the beneficiaries."

With inputs from PTI