What should happen?
The present sub-limit on principal for claiming tax rebate on repayment of home loans up to Rs 20,000 under Section 88 is a dampner for most taxpayers with a home loan. They would like to see a higher exemption limit under Section 88.
According to press reports, the Confederation of Real Estate Developers' Association of India (CREDAI) have sought the removal of Rs 20,000 exemption limit on principal, while retaining the overall ceiling of Rs 150,000 on interest.
On the other hand, the National Real Estate Development Council (NARDECO) wants to enhance the overall exemption on principal to Rs 70,000, the maximum possible limit eligible under Section 88.
What is likely to happen?
The Kelkar Committee has proposed to scrap Section 88 in which case all benefits associated with it, like exemption of principal component on home loan, will be nullified.
However, we believe that the budget proposals are likely to continue with the income tax exemption on interest and principal components in some manner.
