New Delhi:The government on Monday proposed 100 percent deduction for profits to housing projects building homes up to 30 sq. metres in four metropolitan cities and 60 sq. metres in other cities.

This was announced by Finance Minister Arun Jaitley while presenting the union budget for 2016-17 in the Lok Sabha.

“In order to fuel activity in the housing sector, I propose to give 100 percent deduction for profits to an undertaking from a housing project for flats up to 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019, and is completed within three years of the approval,” said Jaitley.

“Minimum Alternate Tax (MAT) will, however, apply to these undertakings,” he added.

There was also something on offer for first time home buyers in the budget.

“For the ‘first home buyers’, I propose to give deduction for additional interest of Rs.50,000 per annum for loans up to Rs.35 lakh sanctioned during the next financial year, provided the value of the house does not exceed Rs.50 lakh,” he said.

“Another proposal to stimulate housing activity is to facilitate investments in Real Estate Investment Trusts. I propose that any distribution made out of income of SPV (special purpose vehicle) to the REITs (Real Estate Investment Trust) and INVITs (Infrastructure Investment Trusts) having specified shareholding will not be subjected to Dividend Distribution Tax.”

Jaitley said: “It is proposed to exempt service tax on construction of affordable houses up to 60 square metres under any scheme of the central or state government including PPP (public-private partnership) schemes.”

The finance minister also proposed to extend excise duty exemption presently available to concrete mix manufactured at site for use in construction work to ready-mixed concrete.