Homebuyers have a lot to gain from the budget
Genuine buyers and tenants to benefit the most
First time homebuye r s a r e l i ke l y t o benefit the most from finance minister Arun Jaitley’s budget as they have been given an additional deduction on interest for a home loan sanctioned in the financial year 2016-17, up to ₹ 35 lakh, provided the house value doesn’t exceed ₹ 50 lakh and the buyer does not own any other house on the loan sanction date.
This benefit ought to have been extended for everybody, not only the lower middle class. Also, there should not have been a cap on the cost of the house which in this case has been set at ₹ 50 lakh, says a tax expert.
The government had earlier provided a total deduction of up to ₹ 1 lakh, towards interest on housing loan, for loan up to ₹ 25 lakh and house value up to ₹ 40 lakh, to be availed over financial year 2013-14 and financial year 2014-15 . The Government has now reinstated a similar deduction with revised limits and conditions, says Parizad Sirwalla, Partner – Tax, KPMG India
The Budget has also proposed an increase in the limit of deduction of rent paid under section 80GG from ₹ 24,000 per annum to ₹ 60,000 per annum to provide relief to those who live in rented houses and do not receive a House Rent Allowance.
In light of the increased rental costs, the increased deduction limits will benefit genuine tenants who rent a house because they do not own one, says Parizad
Tax experts also point out that the proposal to extend the tax deduction limit on house rent allowance will only benefit those who do not get house rent allowance.