PricewaterhouseCoopers suggests hike in cap on housing loan interest and medical expenses

The PricewaterhouseCoopers - the Advisory and Tax Regulatory services consultancy firm demanded increasing the cap on the amount for deductions for the interest payments on housing loans and also for the medical expenses for the purpose of tax benefits in the upcoming Budget. Currently the interest payments on housing loans up to Rs 1.5 lakh are eligible for deduction and PwC suggested that it should be increased to Rs 3 lakh.

He said the realty sector has been under pressure for quite some time now and the government should provide incentives for the investments into the housing sector, which will support in reviving the economy.

The deductions for medical expenses, which currently is at Rs 15,000 per annum, Ladda asked for an increase to Rs 50,000. The revision on this has not happened in the past 14 years, but medical cost has surged manifold since then.

He also said the government should revisit standard deduction, called off since 2006, for the next fiscal.

Finance Minister P Chidambaram is scheduled to present his Budget on February 28 and he has a tough task in hand to rein in fiscal deficit which he had said would be capped at 4.8 per cent next fiscal and 5.3 per cent of GDP this fiscal.

However, due to a variety of reasons, including the fragile state of the economy, the government is widely expected to run short of its targeted tax collections this fiscal, thus possibly missing the target this fiscal.