The government may revive tax benefits for real estate developers for constructing houses for the economically weaker sections (EWS). The scheme was discontinued last year.
Section 80 1(B) of the Income-Tax Act allows a developer constructing houses with an area up to 1,000 sq ft in Delhi and Mumbai and 1,500 sq ft in other cities to avail tax exemption on profits. The urban housing ministry has asked the finance ministry to consider the proposal.
According to a housing ministry estimate, the urban housing backlog in India is huge, especially for EWS and low income groups (LIG), which constitute more than 99% of the total urban housing shortage of 24.71 million. Almost 21% of the total urban population lives in slum-like conditions and 35% in one-room tenements.
In order to give this segment better housing at affordable rates, there is a need to incentivise the industry, an official said. It was public housing agencies, which were in the forefront of providing housing for EWS. But given the magnitude of the shortage and budgetary constraints, it is clear that public sector efforts will not suffice in fulfiling the demand.
Therefore, the private sector has to play a more proactive role in taking up housing programmes on a massive scale for the poor and low-income groups, the official said.
The government also intends to involve the private sector in the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) for completion of 1.5 million dwelling units in the country by the end of 2012.
According to a National Housing Bank (NHB) data, the government has not been able to meet its target on housing low income groups. In 1999-2000, against a target of 44,000 LIG houses, the government could construct only 27,000, while in the EWS category, it could build only 28,541 houses as against the target of 96,571.
The housing ministry is of the view that premium housing has already taken off in a big way and the private sectors contribution to the segment has been well established. With market forces determining the return on investment here, it is expected that the private sector will continue to build the category.