Stung by widespread criticism within the ruling Bharatiya Janata Party, Kelkar Committee on tax reforms is expected to submit watered down final reports on direct tax and indirect taxes, particularly on the politically sensitive issue of elimination of incentives for housing in personal Income Tax.
The two reports, to be submitted to Finance Minister Jaswant Singh on Thursday and Friday, are likely to recommend tax deduction of upto Rs 50,000 or Rs 75,000 for mortgage interest on housing loans as against the present eligibility of upto Rs 1,50,000 per year, official sources said.
This middle path was being adopted keeping in mind the flak the government had received at the hands of BJP and the middle class, sources said.
The task force had originally suggested doing away with this exemption on housing loans in one go or in three years by reducing the exemption limit by Rs 50,000 every year.
Finance Minister Jaswant Singh has already indicated that he would strive for a balanced approach while moving towards softer interest regime by providing differential rate of interest for pensioners and the retired employees and hence tax exemptions provided to senior citizens are likely to be continued.
For the salaried class the tax exemptions on savings is likely to be phased out keeping in mind that the exemption limit for personal Income Tax is likely to be raised from the present level of Rs 50,000 to Rs 100,000 per annum, the sources said.
