(2009-07-28) Govt extends hand to buyers
The government on Monday extended a hand to the real estate sector - one of the most
The government on Monday extended a hand to the real estate sector - one of the most affected by the economic downturn - for loans more affordable for middle class buyers.
Pranab Mukherjee Minister of Finance announced a 1 percent interest subsidy on loans up to Rs 10 lakh taken to houses that do not cost more than Rs 20 lakh.
The movement, which is estimated at an additional cost the government Rs 1.000 crore this year, came with several other concessions budget, the finance minister has offered to meet the finance bill in the Lok Sabha.
Other measures included in the education of more profitable loans, tax breaks for food processing and poultry industries and infrastructure related to financial concessions to help the recovery of the economy in general.
In addition to the interest subsidy, the finance minister has also extended the deadline for completion of certain exemptions from real estate projects a year to March 2012. These projects must be approved by March 2008, instead of an old schedule in March 2007.
The move is expected to improve margins and cash flows of companies of real estate, and therefore not only help accelerate the work, but also offer better prices.
"I expect developers to provide the benefit of tax holiday home buyers by reducing prices in an appropriate manner"
Mukherjee said.
Real estate companies, however, said the measures fall short of expectations. "The tax holiday was extended only for projects that were approved over a year. The profits would have been much higher if the projects to March 2010 were made eligible," said Kumar Gera, chairman of the Confederation Commercial Property Association of India.
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