rediff.com: Budget 2000 Impact


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March 1, 2000

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Housing

Overall impact: Positive

The government has taken a number of steps to provide a boost to the housing sector. These include plan allocations under several schemes as well as certain taxation measures. Plan allocations are mainly aiming at accelerating growth of the housing sector in rural areas on the following lines:

The government has planned to set up 2.5 million dwelling units in rural areas.
1.2 million houses are planned to be provided to people below the poverty line. A plan allocation of Rs 15.01 billion has been made for the same.
100,000 houses are planned to be provided for families having income less than Rs 32,000 a year. Accordingly, a plan allocation of Rs 920 million has been made.
Under Golden Jubilee Rural Housing Finance Scheme, National Housing Bank will finance companies for construction of 150,000 houses.
HUDCO is to get equity support from the government to the tune of Rs 3.5 billion so as to enable it to finance about 900,000 houses.
The co-operative sector and voluntary agencies are to support the construction of about 150,000 houses.

Major taxation issues that will provide a fillip to the housing sector are:

The finance minister has extended the benefit available for deduction of profits from housing projects for two more years, ie for houses or projects that are to be completed by March 31, 2003. Earlier, this benefit was available only for those housing projects which were to be completed by March 31, 2001.
Extension of terminal date (March 31, 2002) for tax incentives provided to individuals in respect of interest (Rs 75,000) on housing loans and enhancement of incentives on housing loan repayments from Rs 10,000 to Rs 20,000 will encourage home construction activity.
Capital gains arising from transfer of a long term capital asset was exempt only in cases where an assessee invested the net consideration in a residential house. The overriding condition was that the assessee should not own any residential house on the date of transfer of the original capital asset. The finance minister has now relaxed the overriding condition, thus enabling individuals to avail the tax exemption even though they may already own a house.

Negative features