The government announced for lower cost housing are expected to have a significant impact on the affordability of such homes, and encourage developers to get into the segment.
As per the government’s announcement, the value of the house that’s eligible for such subsidy can go up to twenty lakh rupees, but the subsidy will be applicable only on loans up to ten lakh rupees.
The move to extend by two years the tax exemption available to builders of smaller homes is also likely to convince builders to cut the cost of such homes.
The government has extended the provision of section 80IB (10) of the Income Tax Act to projects approved before March 2008 and to be completed before 2012. Earlier, the provision was limited to projects sanctioned before March 2007 and to be completed before March 2010.
The extension exempts builders from paying tax on income from the sale of houses of one thousand square feet built-up area within 25 km of municipal limits of big cities and fifteen hundred square feet in other areas.
Some say that very few projects were launched during the extended period, so it’s unlikely it will have a major impact. But Confident, which did launch projects during that period, thinks they’ll now be able to offer more aggressive prices for them. That could help to drive demand and also facilitate completion of the projects by 2012.

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