DNA: Task force recommends 0.5% housing cess: March 30, 2009

 

The high-level task force, set up under HDFC chairman Deepak Parekh by the Union ministry of poverty alleviation, suggested a levy of 0.5% cess on all central taxes towards setting up a dedicated “shelter fund” to be managed by the National Housing Bank. With budgetary support of an equivalent amount, the task force said that it would have a long-term impact on affordable housing.

 

Acknowledging the legislative process for having a real estate regulator would be time consuming, the Parekh committee suggested setting up of an ombudsman in each state. “The role of the housing and real estate ombudsman would be to monitor housing projects under Jawaharlal Nehru National Urban Renewal Mission (JNNURM), ensure proposal appraisals with beneficiaries and address consumer grievances,” said the report submitted to the Centre.

Stating the concept of one-size-fits-all would be “counter-productive” to define affordable housing, the panel sought to redefine its parameters. It said that the economically-weaker section (EWS)low income group (LIG) flats could be between 300-600 sq feet compared to the earlier 250 sq feet for EWS and 300-325 sq feet for LIG.

The cost, however, should not exceed four times the household gross annual income and EMI rent should be less than 30% of the monthly income.

It further suggested enhancing middle income group (MIG) limit to carpet area of
1,200 sq feet from 650 sq feet. The cost should be less than five times the household gross annual income with an EMI rent not exceeding 40% of the household’s gross monthly income, it said.

The task force suggested establishing a housing finance company focusing only on micro-finance loans and to promote household savings in the informal sector to enable a down payment for a loan.

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