Government not to reverse tax incentives for housing sector

New Delhi: Indian Finance Minister Jaswant Singh has said that the government has no intention to reverse the policy of tax incentives for the housing sector, which has grown at a rapid pace compared to other sectors in the past three years.

“It will not be sensible to reverse the policy for the housing sector, which has witnessed 25-per cent growth in the past three years,” Singh said when asked whether the government is planning to continue with fiscal incentives for the sector.

Earlier the Kelkar Committee in its consultation paper on India’s tax structure had recommended phasing out the income-tax deduction available on interest on housing loans for owner-occupied houses. Currently IT deduction is available on the interest component up to Rs 1.5 lakh on housing loans.

The panel recommended pruning the deduction to Rs 1 lakh in the assessment year 2004-05, Rs 50,000 in the assessment year 2005-06 and nil in the assessment year 2006-07.