In what can hold out hopes for lakhs of home owners, the urban development ministry is pushing a proposal to double the income tax relief on home loan interest payout to Rs 3 lakh, triple the exemption on payment of the principal amount and reduced interest rates for houses up to Rs 30 lakh.

Urban development minister S Jaipal Reddy raised the demand in a pre-budget meeting with finance minister Pranab Mukherjee on Tuesday arguing that I-T concessions would boost the recession-hit realty sector besides giving relief to households affected by the economic slowdown.

The ministry, which is pushing a proposal to hike income-tax exemption available for interest payment on home loans to Rs 3 lakh a year, is also batting for raising the limit for exemption on repayment of principal amount to Rs 3 lakh.

Currently, taxpayers taking housing loans are eligible for I-T exemption on interest payment of up to Rs 1.5 lakh every year. Along with this, the repayment of principal amount up to Rs 1 lakh is part of investments eligible for benefit under Section 80(C) of the Income Tax Act.