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Budget raises home loan limit, SEZs come under MAT of 18.5 percent

The Financial Express

March 01, 2011

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The Urban middle income housing consumers, who have been reeling under the pressure of spiraling prices, seem to have been left out of any meaningful benefit in the Budget 2011-12, industry players feel.

While the limit increase for 1% interest subvention, introduction of e-stamping, raising priority home loan limit from R 20 lakh to R 25 lakh and investment linked deduction scheme have been positives, bringing SEZ under MAT and no mention of STPI exemptions have been a dampener.

“Increase limit to R 15 lakh for 1% subvention, increasing limit to R 25 lakh for priority lending for home loans are welcome,” said Lalitkumar Jain, CMD, Kumar Urban Development. “Measures such as expanding the coverage of interest subvention to a loan of R 15 lakh for a house costing R 25 lakh and providing 100% deduction in respect of capital expenditure incurred on development of affordable housing will certainly aid in boosting the demand and development of affordable housing,” said Sanjay Chandra, MD, Unitech.

The FM enhanced the existing housing loan limit from R 20 lakh to R 25 lakh for dwelling units under priority sector lending. “Raising the priority home loan limit from R 20-25 lakh is good news for the low income group segment, but will do nothing to ease the pain in the metros where demand for affordable housing is highest,” said Anuj Puri, chairman & country head, Jones Lang LaSalle India. To provide housing finance in rural areas at competitive rates, the Budget proposed to enhance the provision under rural housing funds to R 3,000 crore from the existing R 2,000 crore. “Mortgage risk guarantee fund for rural housing will help introduce rural population to invest in entry level housing with mortgage support, as against public funded projects,” said Kamal Khetan, chairman & MD, Sunteck Realty.

The Budget remained silent on the issue of extension of the STPI exemptions and Sec 80IA and 80IB, which are pertinent to the construction of residential projects below 1200 sq ft. The FM will also be introducing a bill to amend the Indian Stamp Act, 1899. The Budget mentioned that MAT would be levied on developers of SEZs as well as units operating in SEZs. PC Nambiar, VC of the Export Promotion Councils for EOUs & SEZs and director, (group) EXIM at Serum Institute of India said that imposing MAT of 18.5% on SEZs will adversely affect investments in SEZs.

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