A proposal to boost demand and rebuild the slowdown-hit housing industry:The ministry of housing and urban development has urged finance minister Pranab Mukherjee to make an announcement to this effect as part of his Budget presentation in early July, a government official said on condition of anonymity.
Existing tax exemption limits inadequate to boost housing - focus area of Rahulbaba's government:At present, taxpayers taking housing loans are eligible for income-tax exemption on interest payment of up to Rs 1.5 lakh every year.
Besides this, the repayment of principal amount is part of investments eligible for benefit under Section 80(C) of the Income-Tax Act, which has a ceiling of Rs 1 lakh.
The existing tax exemption limit is considered inadequate at a time when a two-bedroom house in big cities costs at least Rs 25 lakh.
Considering a person takes a loan of Rs 20 lakh at an interest rate of 9.5%, he would pay Rs 1,88,493 towards interest alone in the first year. His annual interest payment in the first five years would be more than Rs 1.5 lakh.
If the exemption limit is hiked to Rs 2.5 lakh, then a person paying that much home loan interest in a year will save an additional Rs 31,000 in tax every year. This saving of over Rs 2,500 a month would be significant for most borrowers, making home purchases more affordable.
To boost housing, Rahulbaba, start deduction as soon as loan repayment starts!The housing industry has urged the government to allow for the deduction as soon as loan repayment starts, as it would give substantial relief to home buyers and boost demand.
Are you ready to boost the housing?Surprisingly, these people don't look happy about getting an opportunity to boost the housing! Rahulbaba would be very disappointed if he reads these comments.
dharminder, Mumbai, says:
The government of aam aadmi is hell bent on rescuing the builders. Instead of forcing the builders to reduce the exorbitant prices it is instead trying to prop it up with artificial incentives. If the govt. cannot force these builders then at least it should let the forces of demand and supply play out in the market.
The news channel already have reported that builders have increased prices by 200-300 sq. ft. What brilliant anticipation or they knew beforehand?
It is a shame we have such corrupt people in our govt. During the last 4-5 years one is getting the distinct impression that govt. is subjugated to builders.
[15 Jun, 2009 1319hrs IST]
BhanuMurty, Hyderabad, says:
YES! YES! The Builders will be happy and the banks will also be happy. NOT THE CUSTOMERS!
The customers still have to pay the exorbitant interest to these banks.A reduction of Rs.2500 per month in the EMI? For how long? How long banks can afford these lower interest rates? One year like SBI promised? What next? The cyclic nature will take its own course of action and whatever falls, will have to rise again. On the pretext of one or the other, these same banks will increase the Rate of Interest. Can you guarantee that they will not????Also see how the interest rates on deposits have been reduced of late.
The solution is not in empowering one sector and diluting another(PPF/NSC Interests). See how clever is the Government. IN total, it has not done anything for the masses. Reduce the interest on safe avenues, get it filled with real estate sector. This is a zero sum game for the Home loanee, as he will benefit from neither.
[15 Jun, 2009 1204hrs IST]
Ram, Chennai, says:
This is of no use to the common man. What the common man needs is drastic reduction in the price of homes. Dear Mr. finance minister, instead of conning the common man like this, pls force the builders to reduce their price.
[15 Jun, 2009 1001hrs IST]
Venkateswar Oruganti, Hyderabad, says:
Govt should mainly give better tax break for Principal re-payed or else banks will extract more from loaners.
[15 Jun, 2009 0904hrs IST]
To read more, please, visit - The Economic Times
I am sure, you are different. You are 100% ready to boost the housing. Aren't you? Please, share your views in the comments.
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