Government plans another package for real estate

Government is planning another round of home loan package to make purchase of a house within the reach of middle class. PSB announced a home loan rate-cuts for homebuyers, a week ago. But, it was found that the package was far from expectations of both the public and developers. In that package, home loan up to five lakh rupees will be available on an interest rate of 8.5%. Loan beyond five lakh rupees and up to twenty lakh rupees will be available from PSB at 9.25%.
But, there is least possibility of any house available for up to twenty-five lakh rupees in big cities. Builders and developers feel the scheme would not fetch the desired result in fighting the slowdown.
The country is facing one of the worst industrial slowdowns in the last fifteen years. It is felt that the economy might get affected badly. To avoid such a situation, government is planning to adopt concerted strategies to arrest the slowdown. The government feels that it can play a vital role in turning around the sentiment.
It is felt that making funds affordable for end users could play an important role. Therefore, the government is planning to increase the present limit of twenty lakh rupees for the concessional rate to thirty lakh rupees. This will meet the requirements of a huge number of buyers in the cities of NCR, in Mumbai, Bangalore, Pune, Chennai and Hyderabad. If the limit is raised to thirty lakh rupees, one can buy a house up to thirty-five lakh rupees with the cheap loan.
Besides, it is learnt the government is also planning to increase the tax rebate on payment of interest on home loan. At present, an interest amount up to Rs 1.50 lakh paid on the home loan taken to buy a house for self-use is deducted from the taxable income.
The limit is likely to be increased to two lakh rupees. This will help reduce the cost of fund further. At present, if one takes a loan of thirty lakh rupees at the concessional rate of 9.25%, the interest payment in the first year comes to around Rs 2,77,500. Out of this, you can take a tax benefit on Rs 1.50 lakh only, which will be deducted from your income, enabling you to save a tax outgo of Rs 45,000. Which means, net interest one pays in the first year is only Rs 2,32,500. This brings down net interest rate on loan to 7.75% from 9.25%.