Bangalore: In order to arrest the declining growth rate, industry associations have demanded raising the tax limit ceiling for housing loans. According to Ficci secretary general Rajiv Kumar the exemption should be harmonised with the rising interest rates and increased to at least Rs2.5 lakh New Delhi: In a bid to boost housing sector credit, the government is contemplating to enhance income tax exemption up to Rs3 lakh paid as interest on housing loans in a year, from the existing limit of Rs1.5 lakh, reports PTI. The government is considering raising the tax deduction limit for housing loan in the coming Budget, which is scheduled to be tabled on 16th March, sources said. At present, a deduction of up to Rs1.5 lakh is available from taxable income towards interest on loan taken for house. Besides, borrowers can enjoy exemption on payment of principal amount. However, it is part of exemption to savings capped at Rs1 lakh per annum. With the property prices and interest rates rising with each passing year, there is need to revise the limit, sources said. In order to arrest the declining growth rate, industry associations have demanded raising the tax limit ceiling for housing loans. According to Ficci secretary general Rajiv Kumar the exemption should be harmonised with the rising interest rates and increased to at least Rs2.5 lakh. “We recommended that the existing tax deduction limit on income tax of an individual should be increased from the current level of Rs2.5 lakh to at least Rs5 lakh,” CII director general Chandrajit Banerjee said. Of this, Rs3 lakh should be towards interest payment to offset the impact of high interest rates, he said, adding the remaining Rs2 lakh should be exclusively towards principal loan repayment as the present limit of Rs1 lakh is already overcrowded with several other items. Echoing views, Assocham and PHD chamber said that exemption limit needs to be raised both for interest and principal. As per the Direct Taxes Code (DTC), which would replace the decades old Income Tax Act, there is income tax exemption for up to Rs1.5 lakh paid as interest on housing loans in a year.