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Housing gets infrastructure status; minister talks of FDI

Even as the Union government granted infrastructure status to housing entailing several fiscal concessions, Union Urban Affairs and Employment Minister Ram Jethmalani said the government would not hesitate to allow foreign direct investment if the country's private economy fails to fulfil its social obligation.

''If the private sector does not fulfil its social responsibility, I'm going to allow FDI in housing sector,'' Jethmalani said while addressing a session on 'Urban Development -- Ideas for the New Millennium' organised by Bharat Chamber of Commerce in Calcutta.

He described housing and infrastructure as major tools to rejuvenate the economy in view of the ongoing worldwide recession and said his government's new housing policy envisaged privatisation of the housing sector.

He said his ministry had decided to go for an ordinance to repeal the Urban Land Ceiling Restrictions Act and to incorporate closure laws through amendment to the National Housing Development Act to securitise debts.

''We have to build a large number of houses this year but we don't have sufficient funds. We will contribute land and law while the private sector funds for the speedy implementation of the projects,'' he said.

Jethmalani urged the West Bengal government not to oppose the new housing policy simply because it had opted for privatisation of the housing sector and said even the communist government of China had adopted a similar policy this year.

He also announced a total tax holiday for those projects in the housing sector which would be completed within three years.

West Bengal Urban Development Minister Ashok Bhattacharya emphasised the need for public sector intervention for development of infrastructure and the housing sector and said it could always play an important role in these two fields.

''We do not agree with the Centre's new housing policy which believes that direct public sector intervention is a necessity for infrastructure development, '' Bhattacharya said.

Listing the projects taken up by his government to solve the housing problem of the poor, Bhattacharya said his government had been successful in checking migration of the rural population through land reforms and development of agriculture and agro-based industries in the state.

In New Delhi, the Union government granted infrastructure status to housing sector under Section 8-1/1 IA of the Income Tax Act.

Approved housing projects henceforth can avail several fiscal concessions, 100 per cent deduction from profits for the first five years and 30 per cent deduction for the subsequent five years.

In addition, deductions from taxable income like rental income have been increased from 20 per cent to 25 per cent under Section 24 of the IT Act. Part of the interest repayment on loan taken for house building is deductable under the IT Act in case of self-occupied houses.

The deductable amount has been increased from Rs 15,000 to Rs 30,000 per annum, under Section 71 of the Income Tax Act; losses from house property have been permitted to be set off against other incomes in the same assessment year; and the balance loss permitted to be carried forward for a maximum eight subsequent years by adding Section 71 H of the IT Act.

Added to this, land held as stock-in-trade has been exempted from assessment under wealth tax for a period of seven years instead of five years. Section 80 GG of the IT Act, in respect of reduction for rents paid out, has been reintroduced. This would permit deduction up to Rs 24,000 per year from taxable income.

Deduction up to 50 per cent of the profits would be permitted to companies engaged in housing projects aided by the World Bank. Exemption of rented properties from wealth tax has been accepted subject to the property being rented out for at least 300 days in a year. The exemption from wealth tax for some specified properties like commercial complexes has been granted.

The government has also granted excise duty concessions on building materials from flyash, phosphogypsum, red mud, agriculture and forestry residues, by products baggasse board, bamboo corrugated sheets, rice husks boards, ready mix concrete, and lightweight concrete blocks.

Custom duty concessions for import of equipment and machinery for building materials using agricultural and industrial wastes and prefabricated building elements have been granted.

The fiscal concessions on building materials and technology are intended to provide better impetus to house building activities in the country now that the government has announced a new housing and habitat policy to provide for two million houses annually in the country. Of these, 700,000 houses will be constructed in urban areas and 1.3 million houses in rural areas.

In a related development in Bombay, the prestigious slum improvement and free housing scheme of the Shiv Sena-Bharatiya Janata Party government in the state which is at present being implemented in the megapolis, is to be extended for Thane.

Yesterday, Maharashtra's Housing Minister Suresh Jain presided over the first meeting of the study group set up for the purpose in which the entire scheme was discussed in detail by the members.

A proposal was mooted to first change the cut-off date for the eligibility from January 1, 1985 to January 1, 1995. Thane MP Prakash Paranjpe demanded that the cut-off period for the eligibility of the scheme should be amended from the present January 1, 1985 to January 1, 1995 and those who find their names in the voters list and occupy the slums.

UNI