To make own house a reality for all people in India the government has brought in various schemes. Let us look at the incentives provided for owning or constructing a residential house and tax benefits provided to a builder or developer. Home loans for individualsAmong all the loans provided by the banks such as business loans and personal loans, housing loan comes with the lowest interest rate. Reserve bank of India (RBI) mandates all banks to allocate certain percentage of loans for purchase, construction and repair of housing properties. Loans to individuals up to 28 lakhs in a city of more than 10 lakh people is considered as priority sector given that the cost of the house does not exceed 35 lakh.

For people in rural area the limit is 20 lakhs and the cost of the house should be within 25 lakh. However people dwelling in metro areas will not benefit much from the priority, residents from small town and rural areas gain the most.Builders/ promoters Amount lent to builder or promoter for building housing for poor section of the society comes under priority. Any family with income less than 2 lakh per year are considered as poor section or from “economically marginalized society”. The limit is 10 lakh per dwelling unit area.Subsidizing interest In addition to treating the above stated category as priority they are also given subsidized interest rates at 6.5 percent.There are no service taxes levied on properties for purchase which are brought from the developer completely.