The Budget 2010-11 should increase the tax exemption limit against the interest payment on home loan and rental income , said real estate companies on Thursday.
As per the present provisions under the Income-tax Act, an individual gets a tax deduction of up to Rs 1.5 lakh against interest payment on home loan. The industry, in a pre-Budget meeting with FM Pranab Mukherjee, demanded that this limit must be increased to at least Rs 3 lakh to give a fillip to construction activities.
The industry also demanded for increasing the limit of Rs 1 lakh against the principal repayment on home loan to Rs 2 lakh and make this benefit a separate category, instead of current practice of making it a part of Section 80C, which is already overcrowded. The companies argued that this would encourage people to purchase houses.
They also demanded for incentives to promote rental housing.
"In view of the housing shortage in the country and the objective 'Shelter for All' and in view of the fact that not all can afford ownership housing, we need to give a big boost to rental housing," the memorandum given by the companies said.
The delegation included Kumar gera of Gera Developer , Pradeep Jain of Parsvnath , Sushil Ansal of Ansal Group and Getambar Anand of ATS, among others.
The industry wanted that income from renting of residential properties be taxed at a flat 10% instead of the present norm of taxing at marginal rate of 30% (if the person falls in maximum slab).
Besides this, they also demanded that only 50% of the rental income should be taxed as against the present provision of 70%. For women and senior citizens, they demanded that entire rental income should be exempted from tax.