Tax Code to affect home seekers

The DTC, while proposing a moderate tax structure, has suggested scrapping of tax benefits currently being granted on payment of interest on housing loans.

As of now, one is entitled to tax benefits on interest payment of up to Rs 1,50,000 per annum on housing loans.

“At this juncture of time when the housing sector is in doldrums because of the ripple effect of the economic slowdown, the proposal to remove tax benefits on interest payment on housing loans would virtually drive away potential home seekers,” a high ranking official of the Confederation of Indian Industry (CII) told Deccan Herald.

“While the government is trying to boost the housing sector by providing several fiscal measures like interest subsidy on housing loans, the DTC proposal is quite perplexing,” the official said.

“The basic factor that prompts majority of salaried class people to go for a house is the current fiscal policy of granting tax benefits on interest as well as principal payment on housing. If the government scraps this benefit the housing sector will receive a jolt,” the official said.

Reacting to the proposals contained in the draft DTC, Federation of Indian Chambers of Commerce and Industry President Harsh Pati Singhania said: “Doing away with the house loan interest deduction facility may come in the way of the ‘Aam Adami’ in his quest for affordable dwelling units.”

As such, the real estate and construction sectors are of the view that withdrawal of tax benefits on housing loans will hamper the growth of the housing segment.

“The draft DTC has been put in public domain for debate and discussion. All the feedback will be taken into account. The final decision will be taken by the government. Again all these will have to be approved by Parliament,” a senior official of the Central Board of Direct Taxes said on condition of anonymity.