BackBuying a house under ₹45 lakh? You can avail extra ₹1.5 lakh tax exemption on home loans
If you are planning a home under affordable housing scheme of ₹45 lakh, you can get additional deduction for the interest paid on the affordable housing up to ₹1.5 lakh under Section 80EEA of the Income Tax Act
PremiumTo boost consumption amid a global pandemic, the finance minister Nirmala Sitharaman announced a slew of measures for reality sector and homebuyers in Budget 2021. The tax exemption on affordable housing has been extended for a year. In July 2019 Budget, the central government provided an additional income tax deduction of up to ₹1.5 lakh for home loans to purchase an affordable housing. Now, the eligibility of this tax deduction has been provided till 31 March, 2022.
What it means for the homebuyers?
Houses valued under ₹45 lakh comes under the affordable housing category. If you are planning a home under affordable housing scheme of ₹45 lakh, you can get additional deduction for the interest paid on the affordable housing up to ₹1.5 lakh under Section 80EEA of the Income Tax Act. The scheme will be valid till 31 March next year. It must be noted that that homebuyer must not own any other residential property as on the date of sanction of the loan to avail this benefit.
This is over and above the tax exemption of up to ₹2 lakh on home loan interest rates under Section 24 of the Income Tax Act. So new home buyers can enjoy the tax exemption of up to ₹3.5 lakh on home loan interest rates.
Budget 2021: Other measures for home developers
To ensure affordable housing for migrant workers, the finance minister also announced the extension of tax holiday for one more year for affordable rental housing projects. "For this, I propose to allow tax exemption for notified Affordable Rental Housing Projects," Sitharaman said while presenting the budget.
Developers constructing the affordable rental housing project will also get tax holiday as they have been availing for affordable housing projects. "The existing provision of the section 80-IBA of the Act provides that where the gross total income of an assessee includes any profits and gains derived from the business of developing and building affordable housing project, there shall, subject to certain conditions specified therein, be allowed a deduction of an amount equal to hundred per cent of the profits and gains derived from such business," the budget document said. One of the conditions is that the project is approved by the competent authority after the 1 June 2016, but on or before the 31 March 2021.
To help migrant labourers and to promote affordable rental, the Budget 2021 proposed to allow deduction under section 80-IBA of the Act to such rental housing projects which is notified by the Central Government in the Official Gazette and fulfils such conditions as specified in the said notification.
"Steps like a one-year tax holiday for affordable housing projects and a one-year extension for an additional deduction of interest up to ₹1.5 lakh on loan for affordable housing will benefit all stakeholders of the industry and boost investments," said Krish Raveshia, chief executive officer at Azlo Realty.
"The one year extension to ₹1.5 lacs tax deduction on homebuyers’ loan for affordable housing units along with tax incentive for affordable housing developers is welcomed by the realty industry. This will continue to provide support to accomplish the "Housing for All" mission," Deepak Goradia, President, CREDAI MCHI.
Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.
