Finance Minister provides incentives for Housing

The government has lowered interest rates on loans for affordable housing, extended a tax holiday given to industrial parks, and lifted the tax burden off road repair costs, adding to the four existing stimulus packages in its effort to propel economic growth to 8-9 % by the end of 2010.

Finance minister Pranab Mukherjee on 27th of July told the Lok Sabha that home loans of up to Rs 10 lakh for properties with a market value not exceeding double that amount will now come with a 1% subsidy on the interest that commercial banks charge.

The minister earmarked Rs 1,000 crore for this, a step expected to give a leg-up to lower and middle-income families. Mr Mukherjee proposed an amendment to the Income Tax Act so that profits from housing projects approved by a local authority between April 1, 2007 and March 31, 2008 will be tax-free if they are completed before March 31, 2012.

The minister urged the builders to pass on the benefit to consumers.

Companies working out of industrial parks can now plan long-term with the tax breaks being extended to two more years, till March 31, 2011. Accordingly, profits from development , operation and maintenance of industrial parks will continue to be tax-free .

Industry body FICCI welcomed the measures saying these, along with the fiscal steps introduced in the Budget and the stimulus packages rolled out earlier, will give a new momentum to the economic recovery that is currently under way.

As part of its continuing efforts to generate activity in the infrastructure sector, the government exempted repair and maintenance of roads from service tax. The tax break is available immediately.