The rate at which economy is growing our urban centers shall add at least 100 million people by year 2020 merely on the account of urbanization. To provide housing to so many people India needs to invest a trillion dollars over the next 10 years. This is equivalent to 80 times our education budget allocation for year 2011-12.
“For the real estate and housing sector, this years’ budget has exceeded expectations given the pressure on fiscal situation. Most importantly, it has taken into account the crying need to focus on affordable housing sector by allowing ECB for low cost housing, road as well as construction. Withholding tax on ECBs for affordable housing has been reduced from 20% to 5% for 3 years and this move will help ease the liquidity in the sector.
The recently tabled Land Acquisition, Rehabilitation & Resettlement Bill, 2011 in Parliament is meant to replace the 117-year-old Land Acquisition Bill of 1894.
What Government can look at is to increase the demand and continue interest reduction in housing or enhance the deduction limit. Government can also provide special tax incentives for budget housing.
While many of the Indian cities are reeling under the apprehension of slowdown with sales nosediving, Pune real estate has defied any such apprehensions.
In a bid to boost housing sector credit, the Indian government is contemplating to enhance the income-tax exemption for up to Rs 3 lakh paid as interest on housing loans in a year, from the existing limit of Rs 1.5 lakh.
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