The real estate sector is a major employment driver. Construction is the second largest employer (next only to agriculture). About 250 ancillary industries such as cement, steel, bricks, timber building materials, etc, are dependent on the real estate and construction industry. This sector employs an estimated 25 million workers and contributes more than Rs.250, 000 crore to the national economy.

It is hoped that the budget strategy for this sector would be one that increases supply of real estate as well as boots demand. Such a strategy will impact the GDP positively and generate huge employment opportunities.

Under Section 80 IB (10), tax concessions are available to developments of residential complexes (comprising all flats of size below 1,500 sq.ft) of over one acre. These concessions are scheduled to end on 31st March 2007. It is hoped that this date will be extended for a further 3-5 years.

Similarly, the sunset clause fir incentives under section 80 IA for IT parks will hopefully be extended and the current restriction that the park should not contain less than 30 units and, further, that no single units shall occupy more than 50 per cent of the allocable industrial area, will hopefully be relaxed.

This is because requirements of IT companies are for large spaces and two thirds of the companies could occupy the entire park. It is therefore hoped that while the aforesaid two conditions will be deleted for industrial parks developed for the IT sector, the criteria to become eligible will be the development of an industrial park for the IT sector containing a total built-up area of aver 50, 000 sq.ft.

There is also a need to rapidly increase the nation’s stock of rental housing. It is hoped this will be done quickly by providing incentives to investment made in ‘housing for rental’. Incentives can be by way of an investment allowance (at say 20 per cent of the investment for five year) as an optional benefit to the rebate u/s 88. Plus rental income from newly constructed houses with an area of each unit not exceeding 1500 sq.ft, being 100 per cent exempt from income tax for the first five year and 50 per cent for the next five years, any loss of direct tax collection will be made-up through indirect taxes like excise duty, service tax, sales tax, stamp duty. Similarly, the current restriction of exempting one house under wealth tax can be removed and whole of the investment in houses for rental can be made wealth-tax-free.

Earlier, there was no ceiling on deduction of interest on loans raised for acquiring self-occupied house properties. Currently the limit is Rs.150, 000 under section 24. it is hoped that this ceiling will be removed