In a bid to boost housing sector credit, the government is planning to enhance income tax exemption for up to Rs 3 lakh paid as interest on housing loans in a year, from the existing limit of Rs 1.5 lakh.
The government is considering to raising the tax deduction limit for housing loan in the coming Budget, sources said. The Budget is scheduled to be tabled on March 16.
Presently, a deduction of up to Rs 1.5 lakh is available from taxable income towards interest on home loans. 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. With the rising property prices and interest rates, there is need to revise the limit, sources said.
According to Ficci secretary general Rajiv Kumar, the exemption should be harmonised with the rising interest rates and raised to at least Rs 2.5 lakh.