The tax holiday on income generated from sales by builders will be a boon for those engaged in providing affordable housing.

The small housing sector has been given the tax holiday till 2012. This announcement will boost the real estate industry, according to Jayakar Jerome, MD, Provident Housing.

"The Finance Ministers decision to exempt income tax till 2012 for property developers of affordable homes and give interest subsidy to home buyers is going to increase the supply of economically priced homes. This is an excellent move and would give confidence to home buyers to re-enter the residential market. Also this move would influence the developers to speed up the launch of new projects in mid housing segment. Hope these moves would reduce the perennial shortage of homes in this country," echoed Anantha Narayanan, Head (Karnataka), DLF Southern Homes.

The government has extended the provision of Section 80IB(10) of the Income Tax Act to projects approved before March 2008 and to be completed before 2012. It exempts builders from paying tax on the income from the sale of houses of 1,000 sq ft builtup area within 25 km of municipal limits.

``The government's decision to exempt builders from paying income tax on the income generated from the sale of small houses will increase construction activities on the outskirts of Bangalore,'' said a builder on condition of anonymity.

The other decision of the government is one per cent subsidy on loans up to Rs 10 lakh for homes priced up to Rs 20 lakh.

Though it is not possible for the middleclass to get an apartment at such a low price within the city limits, the subsidy will mitigate the financial burden of buyers to some extent. ``If the subsidy is implemented, I will get around Rs 10,000 subsidy. It's good news for me, says Mahendra Kumar, a software engineer.

However, the prospective buyers should take care before zeroing in on a particular builder. Since there is no dearth of unscrupulous builders in the city, it is prudent for the buyer to think twice before buying an apartment.

One needs to verify whether the housing project had the necessary approval from the authorities concerned. The buyers should not get carried away by the colourful brochures. Verify whether the housing project, especially the land, is free from encumbrance.