Tuesday, July 28, 2009

Fresh real estate sops to spur revival

The move, expected to further boost housing demand in the economy especially in tier II cities:

Eyeing fresh signs of a revival in the economy, which should nudge growth back to 9% level by end-2010, finance minister Pranab Mukherjee announced fresh tax giveaways for housing and renewed the government’s commitment to more economic reforms and introduction of a single goods and services tax (GST) by 1 April.

Boosting real estate through budgetary support and tax changes:

The budgetary support in the form of a 1% subsidy on the interest rates paid by people with a home loan of up to Rs10 lakh would cost the exchequer Rs1,000 crore in the current fiscal year, Mukherjee said.

Under Section 80 IB (10), income-tax deduction was given to real estate developers for housing projects approved before 31 March 2007. This has now been extended to projects approved between 1 April 2007 and 31 March 2008, provided these projects are completed on or before 31 March 2012.

Kumar Gera, chairman of the Confederation of Real Estate Developers’ Association of India:

"We have been asking for an extension for a long time and I am happy that this step has been taken.

The extension will benefit only those projects that were approved during this period, so it may not have an impact on all housing projects in all markets. It could have an impact on certain micro markets."
To read more, please, visit - livemint.com

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1 comment:

  1. Below is story i read somewhere. Read this and save yourself if you can.

    Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.
    1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.
    2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.
    * The net asset of the country now = 3 dollars.
    3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.
    *A has a loan to C of 1 dollar, so his net asset is 1 dollar.
    * B sold his land and got 2 dollars, so his net asset is 2 dollars.
    * C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.
    * Thus, the net asset of the country = 4 dollars.
    4) A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.
    * B loaned 2 dollars to A. So his net asset is 2 dollars.
    * C now has the 2 coins. His net asset is also 2 dollars.
    * The net asset of the country = 5 dollars. A bubble is building up.
    (5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.
    * As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.
    * B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
    * C loaned 2 dollars to B, so his net asset is 2 dollars.
    * The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.
    (6) Everybody has made money and everybody felt happy and prosperous.
    (7) One day an evil wind blew, and an evil thought came to C’s mind. “Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more.”
    (8) A also thought the same way.
    (9) Nobody wanted to buy land anymore.
    * So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
    * B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
    * C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
    * The net asset of the country = 3 dollars again.
    (10) So, who has stolen the 3 dollars from the country ? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B’s net asset is still 2 dollars, his heart is palpitating.
    (11) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.
    * A owns the 2 coins, his net asset is 2 dollars.
    * B is bankrupt, his net asset is 0 dollar. ( he lost everything )
    * C got no choice but end up with a land worth only 1 dollar
    * The net asset of the country = 3 dollars.

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