New
Delhi: Will it be a populist budget for the ‘already-in-trouble’
construction industry? If sources from
the Finance Ministry are to be believed, middle income group, who are dreaming
to buy a home, will see their dreams coming true after the budget as government
may double the housing loan interest tax exemption limit from the current Rs
1.5 lakh to Rs 3 lakh. The Budget is scheduled to be tabled on March 16.
At present, a deduction of up to Rs 1.5 lakh is available from taxable income towards interest on loan taken for house. Besides, borrowers can enjoy exemption on payment of principal amount. However, it is part of exemption to savings capped at Rs 1 lakh per annum under 80C.
With the property prices and interest rates rising with each passing year, there is need to revise the limit, PTI, quoting government sources, said.
In order to arrest the declining growth rate, the industry associations have demanded raising the tax limit ceiling for the housing loan.
According to FICCI Secretary General Rajiv Kumar the exemption should be
harmonised with the rising interest rates and increased to at least Rs 2.5
lakh.
"We recommended that the existing tax deduction limit on income tax of an individual should be increased from the current level of Rs 2.5 lakh to at least Rs 5 lakh," CII Director General Chandrajit Banerjee said.
Of this, Rs 3 lakh should be towards interest payment to offset the impact of high interest rates, he said, adding the remaining Rs 2 lakh should be exclusively towards principal loan repayment as the present limit of Rs 1 lakh is already overcrowded with several other items.
Echoing views, ASSOCHAM and PHD chamber said that exemption limit needs to be raised both for interest and principal.
As per the Direct Taxes Code, which would replace the decades old Income Tax Act, there is income tax exemption for up to Rs 1.5 lakh paid as interest on housing loans in a year.
At present, a deduction of up to Rs 1.5 lakh is available from taxable income towards interest on loan taken for house. Besides, borrowers can enjoy exemption on payment of principal amount. However, it is part of exemption to savings capped at Rs 1 lakh per annum under 80C.
With the property prices and interest rates rising with each passing year, there is need to revise the limit, PTI, quoting government sources, said.
In order to arrest the declining growth rate, the industry associations have demanded raising the tax limit ceiling for the housing loan.
According to FICCI Secretary General Rajiv Kumar the exemption should be
harmonised with the rising interest rates and increased to at least Rs 2.5
lakh."We recommended that the existing tax deduction limit on income tax of an individual should be increased from the current level of Rs 2.5 lakh to at least Rs 5 lakh," CII Director General Chandrajit Banerjee said.
Of this, Rs 3 lakh should be towards interest payment to offset the impact of high interest rates, he said, adding the remaining Rs 2 lakh should be exclusively towards principal loan repayment as the present limit of Rs 1 lakh is already overcrowded with several other items.
Echoing views, ASSOCHAM and PHD chamber said that exemption limit needs to be raised both for interest and principal.
As per the Direct Taxes Code, which would replace the decades old Income Tax Act, there is income tax exemption for up to Rs 1.5 lakh paid as interest on housing loans in a year.
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