The Union Finance Minister P Chidambaram has been urged by a group of real estate developers to offer more incentives to individuals who are looking at buying low-cost houses.

According to a statement submitted by them through FICCI, the association has urged that the Government of India should encourage the building of smaller unit sizes (thus more affordable for the low income group categories) by giving 100% Income Tax exemption to builder of individual housing units, with less than 499 sq ft of Gross Saleable Area and 50% exemption with less than 999 sq.ft. of Gross Saleable Area.

The realty players have also stated that state governments should give 100% exemption on Stamp Duty on units below a Gross Selling Price of Rs 9.99 lakh; 75% exemption for units below Rs 14.99 lakh and 50% exemption for units below Rs 19.99 lakh.

"Loss to state exchequers will be minimal because these segments comprise 20% or less of total duties collected. The Centre could make up 50% revenue loss through central budgetary support," said Amit Bagaria, chairman, Asipac and also a key constituent of these proposals.

The pre-Budget memorandum has further stated that the Centre and the Reserve Bank of India [Get Quote] should encourage (maybe through some incentives) Banks and housing finance institutions to give similar concessions of home loan interest rates for these Low Income Group (LIG) and Economically Weaker Section (EWS) homes.

"We have also requested the finance minister to reduce the red tape in getting approvals for such budget housing. The building licence/approval processes for residential projects having 90% of total built-up area as units under 999 sq.ft. (balance 10% for supporting commercial facilities) to be simplified and it be made compulsory for local bodies to approve within 30 days of application as per prescribed norms," said Bagaria.