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Attention Homebuyers: Planning To Buy New House? Income Tax Benefits On Affordable Housing Set To Change From Tomorrow
As the income tax benefits for affordable housing is all set to change from April 1, here are some of the key rules homebuyers must know.
New Delhi: Attention homebuyers! Are you planning to buy a new house anytime soon? As per the recent announcements made by the Central government, the income tax benefits on affordable housing are all set to change from tomorrow, April 1, 2022.
Under Section 80 EEA of the Income Tax Act, 1960, the homebuyers are eligible for an additional income tax deduction of Rs 1.5 lakh if the value of the house does not exceed Rs 45 lakh till March 31, 2022.
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The homebuyers must know that to avail this benefit, the carpet area of the house needs to be under 60 square meter (645 sq ft) in metropolitan cities of Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region). For any other cities, the carpet area should not exceed 90 square meter (968 sq ft).
The Central government had in Budget 2019 announced this additional income tax benefit of Rs 1.5 lakh for new homebuyers under Section 80 EEA if they fulfil the criteria. However, this deduction is over and above the deduction of Rs 2,00,000 for interest payments under Section 24(b) of the Income Tax Act.
The move from the Centre was meant to encourage new homebuyers to purchase affordable housing. The Centre in Budget 2020 and 2021 had extended the benefits for one more year. However, the Central government discontinued this tax-break for the upcoming financial year 2022-23 during Budget 2022 presentation.
Speaking to News 18, Sudhakar Sethuraman of Deloitte India said if any homebuyer plans to avail this benefit under the Section 80EEA, the home loan must be sanctioned during the period April 1 2019 to March 31 2022.
He said the stamp duty value of the house property should be less than Rs 45,00,000 and the taxpayer should be a first-time home buyer and the loan is availed from a financial institution during the above-mentioned period.
As the deadline for Section 80 EEA under Income Tax Act is ending on March 31, 2022, homebuyers can avail these two key deductions for their home loans:
- The taxpayers will be eligible for income tax deduction under Section 24(b) of the Income Tax Act for an amount up to Rs 2,00,000 towards interest payments during the financial year.
- Moreover, the taxpayers shall also be eligible to claim a deduction under section 80C of the Income Tax Act for principal repayments during the financial year.
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