The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the finance minister to introduce a separate deduction for home loan repayments for both principal and interest components in the upcoming Union Budget.
Ficci in its pre-budget memorandum said that currently, home loan principal repayment is eligible for tax deduction under Section 80C whereas interest repayment up to Rs 2 lakh qualifies for tax deduction under Section 24B. Ficci says that multiple investment options, small savings instruments, insurance policies and pension plans are also deducted under Section 80C due to which many home loan borrowers do not get the benefit of the tax deduction on their entire home loan principal repayments.
The industry chamber has demanded that there should be a separate section for home loan repayments with a combined maximum deduction of up to Rs 5 lakh for both the principal and interest components.
The industry body said that the upper cap of Rs 2 lakh under Section 24B becomes inadequate for a large number of home loan borrowers in the starting years of their home loan tenure. So a separate section is required for home loan repayments with a combined maximum deduction of up to Rs 5 lakh for both the principal and interest components. They added that the step would boost demand.
FICCI has also suggested the government provide an interest subsidy of 3-4% on housing loans and a concessional tax rate of 15% to companies that invest in green technologies. The housing industry impacts nearly 200 sectors and it needs to be given holistic support in the upcoming budget.
The industry body also suggested the government subsidize the use to 6-7 cylinders per year for poor households, increasing collateral-free loans under CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) from the existing limit of Rs 2 crore to up to Rs 5 crore and extension of the sunset date for newly incorporated domestic companies to commence functioning till March 31, 2025.