FM gives housing a booster dose
New Delhi, July 27
While concerns over the economic slowdown remain foremost, Finance Minister Pranab Mukherjee has introduced certain changes in the tax structure to ensure labour intensive industries get a much-needed boost through tax relief.
The subsidy on home loans will be routed through state-owned banks and housing finance companies registered under the National Housing Bank. It will be available for a period of one year and is intended to provide relief to the middle class that has been plagued by economic uncertainty.
In yet another concession that is expected to be passed on to the common man, the government has announced a tax holiday on profits derived from real estate projects approved between April 1, 2007 and March 31, 2008 and completed by March 31, 2012. The intention is that developers will pass on the tax benefits to home buyers by reducing prices, thus giving relief to a large segment of prospective home owners.
Since road construction is manpower intensive, the government has decided to exempt repairs and maintenance of roads from the service tax net. This would ensure road construction, maintenance and repairs proceed at a high pace and employment is generated.
Tax benefits of an education loan taken by a student will now be available to his or her legal guardian as well. This deduction is available at present to an individual if the loan is for self-study or for studies by a spouse or children of the individual.
Those in the business of processing, preserving and packaging of meat and meat products, poultry, marine and dairy products will also get a tax holiday. At present tax exemption is available only to profits derived from processing, preservation and packaging of fruits and vegetables.
To provide a stimulus to the infrastructure sector to generate incomes in the wake of the slowdown, the finance minister has decided to extend the sunset clause for the industrial park scheme by two years to March 31, 2011. Currently industrial parks enjoy a tax holiday in respect of profits derived by an undertaking from development, operation or maintenance of an industrial park if the development is completed by March 31, 2009.
Commercial production of natural gas in blocks licensed under the NELP-IV round of bidding for exploration of coal methane will be given tax benefit from the year 2010-11 and the subsequent assessment years. At present the government allows tax holiday to an undertaking engaged in commercial production of natural gas blocks licensed under the NELP-VIII round.
The government will release the income tax code by August 29, 2009 so that there is debate and feedback for the same and the benefits are passed on to the common man in terms of simplification of process.