Industry chamber Assocham today asked the government to re-introduce the tax exemption scheme to promote affordable housing in the forthcoming Budget for 2011-12. The chamber also said real estate sector should be accorded infrastructure industry status to allow easier access to loans for its activities.
In a letter to the Finance Minister, Assocham Chairman (Real Estate Committee) Navin Raheja said tax incentives under the section 80IB(10) of Income Tax Act “must be extended by at least five years”.
“The realty firms must be encouraged through fiscal incentives to construct small dwelling units at affordable prices, which should go a long way in uplifting the social status of ‘Aam Aadmi’,” he added.
In the 2010-11 Budget, the government had announced one-time interim relief to the housing and real estate sector by allowing builders to complete affordable housing projects in five years instead of four years to claim deductions on profit under section 80IB(10) of Income Tax Act.
However, this extension is available for housing projects approved on or after April 1, 2005. Under the existing provision of section 80IB(10), 100 per cent deduction is allowed to developers to build affordable housing projects, provided the project is sanctioned before March 31, 2008. Raheja also said the sector should be accorded the long pending status of an industry for purpose of availing long term and short term finances like other industries.
“The definition of ‘infrastructure’ earlier used by the government and all financial institutions allowed for funding of townships and residential/commercial buildings. This seems to have got de-linked and branded as real estate during the time when land and property prices were spiraling,” he added.
The chamber also asked the government to help in purchase of land to develop houses for economic weaker section and low income group. Besides, Raheja said the government should increase the tax saving limit on payment of interests on home loans to at least Rs 2.5 lakh from the existing Rs 1.5 lakh.