In a pre-budget meeting with the union Finance Minister, Pranab Mukherjee; the Urban Development Minister, Jaipal Reddy proposed an interest rate of 7.5 percent on the home loans amounting between Rs. 5 to 30 lakhs.
Reasoning on the same, Reddy said, "The real estate is facing a crisis and so we have proposed a lower interest rate to boost demand. The interest rate cut will motivate more home buyers."
The present interest rates on home loans of up to Rs. 30 lakhs varies between 9.25 to 11 percent.
Reddy indicated that the meeting involved discussions regarding the upcoming budget, - "It was a pre-budget meeting and we discussed budgetary issues," he said.
Reddy also proposed an increase in the income tax exemption limit on the housing rental income from the current 30 percent to 50 percent. The budgetary allocation for the ministry is however, set at same level as that of last year, though Reddy urged the need to increase the allocation considering the critical projects like Commonwealth Games, Metro network expansion and other projects under the Jawaharlal Nehru National Urban Renewal Mission, which are in pipeline.
The minister also proposed exemption of value-added tax and central excise duty on urban transport buses with more than 20 seats.