In a bid to help low and medium income households to own their own dwellings, the government is likely to announce one per cent of interest subsidy on housing loans up to Rs15 lakh with cost of the house not exceeding Rs25 lakh.
As announced in the Budget for 2012-13 by former finance minister Paranb Mukherjee in March this year, a proposal to this effect from the ministry of finance is high on the agenda of the meeting of Union Cabinet, which will meet next week on Tuesday.
Sources in the government revealed that with the budget announcement of extending the “interest subvention scheme on housing by one more year,” it was imperative on the part of the Union Cabinet to approve the proposal and issue a formal notification in this regard.
“The interest subvention scheme for the year 2011-12 was limited to a housing loan up to Rs10 lakh with cost of the House not exceeding Rs20 lakh.
But in the budget, it was announced that the facility would not only be extended for one more year, even the limit for the loan amount and cost of the house would also be increased by Rs5 lakh each,” sources said.
They added that the decision is being taken keeping in view the success of the scheme, as last year the fund allocated for the purpose has been completly utilised. Besides this, the Union government is already providing financial assistance to the low and medium income group people in owning their own houses by assuring investment-based deduction of 150 per cent of capital expenditure in buying affordable homes, exempting service tax on low cost housing of less than 60 square meter and setting
up mortgage risk guarantee trust fund to cover risk of bankers.