Finance Minister Arun Jaitley has introduced an additional rebate of Rs 50000 in his third Budget for 2016, and with that he has elated first time home buyers, as they will avail the proposed deduction over the loan up to Rs 35 lakh against the property costing less than Rs 50 lakh.
It is a move that the real estate industry was staking a big hope for, given the skyrocketing price of housing units over the recent years, thereby posing an apparent threat to the budget of prospective first time buyers.
In order to avail the tax benefits on repayment of housing finance, the home buyers in India are at leeway to claim both the interest and principal components of the same. At present, buyers living in a self-occupied house can get the tax benefit of Rs 2 lakh at best under the tag ‘Income from home property’, said the source.
The Union Budget 2016 has kind of disappointed those expecting surge between 1 lakh to Rs 3 lakh over tax deduction limit against home loans, mostly in metropolitan cities. This is because of the fact that the existing tax deduction limit of Rs 2 lakh is not helping buyers sufficiently, said the source.
The budget also allows loan payers to claim a portion of their EMI outgo against principal repayment as per Section 80C. The amount to be claimed should not reach above the specified range of Rs 150,000, according to the section.
Initially, tax experts and homebuyers were in belief that the government would introduce a separate rebate over principal repayment against the housing finance to provide home buyers major tax relief. However, it is not prevailing as the principal outgo at present is clubbed under section 80C with other tax-saving instruments, said the source.
Source: The Economic Times. February 29, 2016