Fiscal sops for real estate

This year’s Budget may offer fiscal concessions to the real-estate sector for building affordable houses,as this area has become one of the top priorities of the government. The housing ministry has started pre-Budget discussions with stakeholders in the real-estate sector and state governments,with an eye on affordable housing in urban areas. “We are formalising a proposal to be sent for consideration of the finance ministry on extending fiscal incentives to the real-estate sector for giving a much-needed push to housing in urban areas,” a senior government official told The Indian Express.

The real-estate sector has been asking for extension of tax holiday for five years under Section 80-IB(10) for housing projects approved after March 31,2007. “The realty firms must be encouraged through fiscal incentives to construct small dwelling units at affordable prices. The increase in the construction activity would simultaneously give a fillip to other industries such as cement,iron and steel besides generating employment opportunities,” said an industry chamber representative. The chambers have demanded that limit for deduction of interest paid on loans for purchase or construction of houses be raised from Rs 1.5 lakh to Rs 3 lakh.

The ministry will soon hold consultations with major industry chambers such as Confederation of Indian Industry,Federation of Indian Chambers of Commerce and Industry and Associated Chambers of Commerce and Industry of India,and real-estate associations such as National Real Estate Development Council and Confederation of Real Estate Developer’s Associations of India. Given the importance that the ministry attaches to affordable housing,it is likely that housing minister Kumari Selja may herself hold a meeting with them.

In its previous term,the UPA government had laid special emphasis on affordable housing,launching two schemes to address housing shortage in urban areas. While one schemes encouraged state governments to release land for affordable housing,the other offered a subsidy of 5 per cent on home loans upto Rs 1 lakh.