In its ten-point plan to boost investment in the sector, Confederation of Indian Industry (CII) said the present rate of interest of 12.5 per cent to 18 per cent on housing loans for self-occupied property should be lowered to ten per cent in the backdrop of low inflation rate. Proposing incentives for the housing sector, CII suggested that total repayments of housing loans up to Rs 5 lakh should be made deductible for income tax purposes as normal deductions, it said in a statement.

Further, all interest on housing loans for the purchase of self-occupied property should be allowed the enhanced deduction allowance of Rs 75,000 irrespective of when the loan was availed, the chamber said. At present, only loans availed after April one, 1999 qualify for a Rs 75,000 deduction andloans availed before that qualify for a Rs 30,000 deduction.

CII also recommended extension of tax-based incentives to private sector companies offering home loan schemes to employees and tax exemption on housing loan subsidy provided by the employer. Pointing out that housing shortage was expected to be around 6.64 million units by 2001, the chamber said the government should identify factors which were making the industry unattractive. It also suggested provisions for bad and doubtful loans made by housing finance institutions (HFIs) be made deductible for calculations of taxable income similar to that of public financial institutions and state financial institutions so HFIs were not at a disadvantage.

It added that tax exemptions to undertakings that "operate" industrial parks under Section 80 IA(4D) of the Income Tax Act should be extended to those who "develop and build" industrial parks. Further, Income tax exemptions to undertakings that "develop and build" housing projects under Section 80 IA(F)should also be extended to those who invest in property such that rent from housing projects are made tax-free. The chamber said the stipulation of maximum construction period of two and a half years for a housing project to be designated as an infrastructure facility should be removed.