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.
If this proposal is accepted, it will boost the sentiment in the realty sector and increase the individual income between Rs 15,000 and Rs 45,000 leading to higher savings or higher consumer spendings.
The industry associations have conditioned to raise tax limit for the housing loan, in order to control the declining growth rate.
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.
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, reports PTI
Echoing views, Assocham and PHD chamber said that exemption limit need to be raised both for interest and principal.