CII said it was imperative for active private sector participation in the housing sector to meet this shortfall, a large portion of which would be in urban areas.

Of the several factors that presently make the housing sector unattractive to the private sector, the cost of housing finance is the major problem. Also, the growth in housing sector would boost the core sectors such as cement and steel and also provide employment.

CII has proposed that the rate of interest on housing loans for purchase of self-occupied property should be brought down to 10 per cent from the present 12.5 to 18 per cent, especially keeping in mind the low inflation rate.

All repayments of housing loans up to Rs 5 lakh should also be made deductible for Income Tax purposes as normal deductions. Theprovisions for bad and doubtful loans made by housing finance institutions (HFIs) should be made deductible for purpose of calculation of taxable income. Since public financial institutions and state financial institutions are allowed such deductions, HFIs are placed at a disadvantage.

CII said all interest on housing loans for purchase of self-occupied property should be allowed the enhanced deduction allowance of Rs 75,000 as announced in the Union budget 1999-2000, irrespective of when the loan was availed. At present, only loans availed after April 1, 1999, qualify for a Rs 75,000 deduction and loans availed before that qualify for a Rs 30,000 deduction.

According to CII, section 80 IB of the IT Act, 1962, must be amended so that the stipulation of a maximum construction period of two and a half years that needs to be met by a housing project in order to be an infrastructure facility is removed. This would remove an inconsistency that presently exists with section 10 (23G), the definition ofinfrastructure project was widened to include housing projects.

Also, tax exemption that is extended to undertakings that `operate' industrial parks under section 80 IA (4d) of the IT Act should be extended to those who `develop and build' industrial parks.

CII said tax-based incentives should be extended to private sector companies that offer loan schemes to employees and a housing loan subsidy provided by an employer should not be subject to tax. The benefits provided for under section 10 (23G) of the IT Act, should also be extended to include facilities such as by-passes, toll roads, flyovers, transport terminals, health centres and parking complexes, as this would encourage housing in neighbouring places, added CII.