Urban development minister seeks more I-T relief for home-buyers

17 June 2009

In its move to lift the sentiments of the housing market, and giving relief to households affected by the economic slowdown, the urban development ministry is pushing a proposal to double the income tax benefits on home loan interest payout to Rs3 lakh.

Urban development minister S Jaipal Reddy raised the demand in a pre-budget meeting with finance minister Pranab Mukherjee on Tuesday saying that income tax concessions would boost the recession-hit realty sector.

Reddy also calls for tripling the exemption on payment of the principal amount, reducing interest rates for houses up to Rs30 lakh, and raising the income tax exemption limit on rental income to 50 per cent from the current 30 per cent.

Currently, taxpayers taking housing loans are eligible for I-T exemption on interest payment of up to Rs1.5 lakh every year. Along with this, the repayment of principal amount up to Rs1 lakh is part of investments eligible for benefit under Section 80(C) of the Income Tax Act.

"It was a pre-budget meeting and we discussed budgetary issues," Reddy said after the meeting.

"The real estate is facing a crisis and so we have proposed a lower interest rate to boost demand. The interest rate cut will motivate more home buyers," Reddy said.