In the July 2019 budget, the maximum amount of interest paid on a housing loan eligible for a tax benefit was increased to Rs 3.5 lakh against Rs 2 lakh previously, an increase of Rs 1.5 lakh for the buying a home through an affordable housing program. An additional tax benefit has been given to first-time buyers of a home with a stamp duty value of up to INR 45 lakhs.
Naveen Kukreja, CEO and Co-Founder of Paisabazaar.com, said: “As expected, the 2020 budget extended the deduction available under section 80EEA until the next fiscal year. This will give a much needed boost to the housing sector and help achieve the government’s policy objective. of “Housing for all by 2022”. ”
Under income tax laws, an individual can claim interest paid on the home loan as a deduction from total gross income. The amount of interest that can be claimed as a deduction is currently capped at Rs 3.5 lakh for the above category (those buying a house under an affordable housing program). This increase in the amount of the deduction was authorized as of the 2019-2020 financial year.
This will benefit middle-class first-time home buyers who will benefit from an increased deduction of Rs 1.5 lakh (in addition to the existing deduction of Rs 2 lakh) due to the interest on the home loan for a home. worth up to Rs 45 lakh if the loan is taken before March 31, 2021.
Current income tax laws allow for various tax advantages on home loans depending on the type of house, i.e. independent or rented property.
Currently, for a single-family home, one can receive tax relief on the principal amount repaid on the home loan as well as the interest paid on it. Under section 80C of the Income Tax Act, you get a deduction for the principal (of the loan) repaid up to Rs 1.5 lakh per year and the interest paid is deductible up to at Rs 2 lakh per year under section 24. These deductions are allowed from the total gross income before tax calculation, thus reducing the total tax payable.