Mumbai: Builders' Association of India (BAI) on Sunday sought increase exemption limit on interest of home loans to Rs 3 lakh from the present Rs 1.5 lakh in the Union Budget to be presented next week.
"We demand Finance Minister P Chidambaram to hike exemption limit on interest of home loan from present Rs 1.5 lakh to Rs 3 lakh in the forthcoming Union Budget to keep the pace of interest to cover cost of flats available in major parts of the country," BAI Secretary Anand J Gupta said in a statement.
At present, there is an exemption limit of Rs 1.5 lakh for the present interest rates on home loans ranging between 10- 11 percent per annum and the amount is sufficient only on home loan up to Rs 15 lakhs, Gupta said.
All the major towns having population above 1 million hardly find any location and flats available within Rs 15 lakh since most of the houses cost Rs 30 lakh and above.
"We builders feel that since Independence, out of the three basic needs - 'roti, kapda and makan' - we have successfully overcome the need for food and clothing, but have miserably failed in solving housing problems in urban areas," the BAI official said.
There is a shortage of 30 million houses in urban areas. Union Budget is a great instrument to frame a policy to overcome these issues, he said.
While demanding 'infrastructure status' for the real estate sector, Gupta said it will require a bold and far sighted decision on the part of the Union government to remove shortage of housing stock in urban areas, Gupta said.
Similarly, the Finance Minister can also put rental income under the infrastructure status, he suggested.
Infrastructure status will enable them to be completely tax free and if the same status is given to real estate, it can pull resources to this sector. Such steps can check shortage of housing stock in a short period, Gupta said.