The 2009 Mr. Salim committee report (parliamentary standing committee on housing) lays great emphasis on accelerating housing supply through increasing housing stock and promoting rental housing. It also refers to 24 million home shortage which will soon be 27 Million and ever increasing.
The government will have to go out of the way to accelerate housing stock. The low income group housing is defined as accommodation up to 80 sq mtrs. After National housing policy was announced, then the government brought scheme under section 80 IB of Income tax act . This was very effective and housing stock multiplied . Also black money was substantially reduced in real estate sector due to provisions of 80 IA and 80 IB.
Now that one segment9 top 15% of pyramid is addressed ,there is need to address the lower 35% as bottom 40 % falls under social housing (slums etc).
The major issue is 30 to 36 % of sale value are taxes( excise, VAT, service tax, stamp duty etc). The government needs to address this situation. If the tenement come 30% cheaper just due to reduction in taxes then that is where we need to attack.
Few suggestions:
- Create a scheme where such notified projects with tenements up to 80 sq mtrs. Will have 90 to 100% tax concession from current levels(the states also will need to chip in with similar concessions in stamp duty)
- Reintroduce scheme under section 80 IB under Income Tax act for another 5 years
- Long term capital gains to be on one year holding (to be reduced from current 3 year)
- All income earned on renting of properties up to 1500 sq ft to be tax free
- Remove ceiling on number of houses to be held by one person.
- All township above 10 acres to be tax exempted under section 80 IA
- Deduction under section 35 AD of IT act for investment in affordable housing
- Allow additional Rs.one lacs home buyer under section 80 C
- Allow subsidized interest rate for First Time Home Buyer
