Consultancy firm PwC today demanded increasing the cap on interest payments on housing loans and medical expenses for the purpose of tax benefits in the upcoming Budget.
"At present, interest payments of up to Rs 1.5 lakh are eligible for deduction and we feel it should be increased to Rs 3 lakh," PwC India Executive Director Sandeep Ladda told reporters here.
He said the realty sector has been under pressure for quite some time now and the government should incentivise investments into the sector, which will go a long way in helping the economy.
On deductions for medical expenses, which currently stand at Rs 15,000 per annum, Ladda asked for an increase to Rs 50,000 and added that revision 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.
Meanwhile, a survey of salaried employees by industry lobby Assocham also pointed out a need to increase the deductions under medical and education heads.
Both Ladda and the Assocham survey called for a need to double the limit on investments which can be deducted.