NEWS & ADVICE : HOME LOANS
Govt. declares subsidy on home loans up to Rs 10 lakh
By Vaibhav Aggarwal
Jul 29, 2009
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The Union finance minister, Pranab Mukherjee announced that the government will provide interest subsidy of 1 percent for one year on home loans amounting up to Rs 10 lakh for properties whose market value unexceeding double that amount.

The estimated cost of the measure to exchequer is around Rs 1,000 crore.

The move is expected to give boost to affordable housing for lower and middle income groups.

Renu Sud Karnad, Joint MD, HDFC, said, "With the real estate segment directly and indirectly supporting 269 big and small industries it will have an positive impact on the economy. Also, with the fear of below normal rainfall haunting, a step like this is a well-timed, well-thought one."

The finance minister has also announced a tax holiday under section 80 IB(10) of the Income Tax Act for on infrastructure projects which were approved between during financial year 2007-08, if these projects are completed on or before March 31, 2012. The minister has urged the developers to pass the tax benefits to customers.

The Government has also taken off tax burden on construction of new roads and repair of existing ones. The tax break is in effect immediately.

The measures are expected to give momentum to economic recovery. 

Describing the role of these measures in economic revival, K Joshi, director and principal economist, CRISIL, said, "We can push domestic demand with stimulus measures. But it is very essential that exports, which are now in the negative territory, should turn positive for faster economic growth."

Government has also raised the tax limit for assessees with severe disability from Rs 75,000 to Rs1 lakh.


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