The Centre has asked the National Housing Bank (NHB) to set up an urban housing fund.
This was announced by Finance Minister P. Chidambaram while presenting the Budget 2031-14.
In consultation with the Reserve Bank of India (RBI), the Centre would provide RS. 2,000 crore to the proposed fund, Mr. Chidambaram said.
The urban fund would be akin to the Rural Housing Fund set by NHB to refinance lending institutions such as rural regional banks that extend loans to rural housing. He also raised the allocation to the Rural Housing Fund to Rs.6,000 crore from Rs.4,000 crore.
Mr. Chidambaram, however, cut the abatement on service tax from 75 per cent to 70 per cent on a flat with a floor area of over 2,000 sq. ft. or prices exceeding Rs.1 crore, making luxury houses expensive.
To make the property transactions more transparent and introduce an element of accountability and avoid under-valuing of properties, the Finance Minister also proposed to levy a one per cent TDS on immovable properties of above Rs.50 lakh. Besides, the Finance Minister raised tax deduction limit by Rs.1 lakh for first-time home buyers. “A person taking a loan for his first home from a bank or a housing finance corporation up to Rs.25 lakh during April 1, 2013, to March 31, 2014, will be entitled to an additional deduction of interest of up to Rs.1 lakh. If the limit is not exhausted, the balance may be claimed in 2015-16. This deduction will be over and above the deduction of Rs.1.5 lakh allowed for self-occupied properties under Section 24 of the Income-tax Act,’’ he added.
This is unlikely to bring any relief to the consumers who have already availed themselves of housing loans and, in fact, benefit those who take loans after April 1, 2013.
Anuj Puri, Chairman and Country Head of Jones Lang Lasalle, said the setting up of the Urban Housing Fund by the NHB would infuse liquidity for urban housing, thereby boosting demand. The TDS of 1 per cent to be charged on the transfer of immovable property was an obvious move to curb speculation and bring about improved reporting and accountability in high-value immovable property transactions, he added. Navin Raheja, President, Naredco, and Chairman Raheheja Developers Limited, expressed disappointment and said there was nothing for the real estate sector.