Infrastructure status for housing sector, one-year extension of tax relief under Section 80-IB in pipeline
If the demand for tax sops and incentives put forward by the the housing and urban poverty alleviation ministry (HUPA) is accepted by the finance ministry, not only the affordable housing sector but the overall infrastructure sector may get a fillip in the coming Union Budget.
Recently, Ajay Maken, the HUPA minister, submitted a detailed proposal in this regard to the finance minister as part of the Budget deliberations.
HUPA has asked for infrastructure status for the housing sector under Section 80-IA of the income tax Act. HUPA has also asked for one-year extension of the tax relief under Section 80-IB of the IT Act. HUPA has also asked for extension of the service tax exemption to all categories of affordable housing projects. Currently, the projects under JNNURM, Rajiv Awas Yojana, affordable housing in partnership and other slum rehabilitation schemes of the state governments are eligible for this exemption.
The HUPA ministry has also sought a separate creation of commercial real estate (housing) guidelines from the Reserve Bank of India (RBI). Currently, the housing sector under RBI guidelines are treated at par with the commercial real estate category.
“Ajay Maken has again put forward the demand of allocating infrastructure status to the housing sector under the Section 80-IA of the Income Tax Act. Along with this, he has also asked for a transient relief under the section 80-IB (10) and service tax exemption for affordable housing,” a senior government official told FE.
Besides, Maken has also expressed a desire to bring in changes in the priority sector lending (PSL) norms. As of now, housing loans up to R25 lakhs has been designated as priority sector lending, Maken has asked for a separate sub group for loans up to R5 lakhs should be created. “A mandatory requirement of 3% incremental bank deposit in housing stock should be exclusively directed only for the sub-group of housing loans up to R5 lakhs,” the official added.
HUPA’s proposal is also understood to have highlighted that despite deployment of gross bank credit in housing has increased there is a need to channelise the same. This according to HUPA can be earmarking atleast 3% of the PSL in housing loans up to R5 lakh exclusively for the economically weaker sections and low income groups. “Maken has said that if such a provision is made