The state has demanded that sale of real estate/houses to non-resident Indians (NRIs), paid in foreign exchange, should be treated as "deemed exports" and all benefits given to exporters under section 80 HHC of the Income Tax (I-T) Act can also be extended to the developers.

The government has also demanded that benefit under section 80-1A of the I-T Act be extended to the housing sector. Mass housing for slumdwellers and weaker sections of the society should receive some special fiscal concessions.

These demands were made by state housing minister Suresh Jain on Friday at a meeting with union finance minister Yashwant Sinha. These demands have come in the wake of the "very slow" pace of functioning ofthe SRA in view of the severe dip in real estate prices. The government could construct only 2,000 tenements so far and has allowed the Maharashtra Housing and Area Development Authority (MHADA) to function as a facilitator and developer for the construction of two lakh tenements within the next two years.

Jain has asked for evaluation of the scheme of pre-emptive purchase under Chapter XXC of the I-T Act and enhancement of easy foreclosure laws in respect of mortgages. The minister welcomed the Centre's decision to repeal the Urban Land Ceiling Act (ULCA) and said that rental housing, while protecting existing tenants, should be encouraged in future. He demanded that the quantum of permissible deduction under Section 24 of the I-T Act should be increased from 20 per cent to 33.33 per cent in respect of outgoings of actual rental receipt.

To encourage house ownership for self occupation, Jain said owners of self-occupied houses should also be allowed deductions for all expenses incurred on house tax,repairs and outgoings. At present, the deduction permitted is only Rs 15,000 on account of interest paid on capital borrowed for construction. Jain said that housing finance should be included in the definition of Infrastructure facility under Section 10 (23G) of the I-T Act and that housing finance firms be allowed to deduct an amount not exceeding 5 per cent of their income for bad and doubtful debts and get exemption under Sec 36 (1) of the I-T Act.