Realtors want back relief under Section 1(B) 10

Developers want more. Despite a lot of incentives given to the real estate sector in the bailout package announced last weekend, developers are still unhappy. They are insisting on reintroduction of Section 80 I (B)10 of the Income- Tax Act, under which, a developer gets tax exemption on profit earned from sale of residential units below 1,500 sq ft.

“We were expecting an announcement in the bailout package but it did not come through. The Confederation of Real Estate Developers’ Association of India (Credai) will take up the matter with the government. The relief would encourage builders to develop properties for lower income groups,” said a Bangalore-based developer.

These exemptions were available for residential units below 1,000 sq ft within 25 km from the local limits of Delhi and Mumbai and below 1,500 sq ft in other cities. The project size had to be over one acre.

There is another clause to this exemption, according to which, such a project should be approved by relevant authorities and should be developed and constructed within the period of four years from date of approval or April 1 2008, whichever is later. The built-up area of shops (if any) in the project should not exceed 5 per cent of the aggregate built-up area.

But these exemptions were removed with effect from 31 March, 2007. “We have represented our case to the government. We expect similar exemptions; if not the same structure,” said G P Savlani, resident director, Credai.

In the bailout package, the government reduced the rate at which RBI lends to commercial banks and the rate at which the central bank borrows from banks, by 1 per cent or 100 basis points (bps).

This ensured that banks lent at a lower rate. This was done with the intention of increasing liquidity in the market, including housing finance companies and providing some relief to the residential development sector. Priority sector lending (loans under Rs 20 lakh) was extended to housing finance companies as well.

Commercial real estate projects also got a few benefits from the packages. The government offered to revamp realty loans for this section till June 30, 2009 on a case to case basis. This was followed by further benefits offered to affordable housing segment by the central government.