Want to Buy House Within Rs 45 lakh? You Can Get Rs 1.5 Lakh Tax Exemption on Home Loans

Sitharaman has already made it clear that the scheme will be valid till 31 March next year and 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.

Edited By: Manmath Nayak

Published: February 2, 2021, 9:47 PM IST

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https://www.india.com/business/want-to-buy-house-within-rs-45-lakh-you-can-get-rs-1-5-lakh-tax-exemption-on-home-loans-4377522/ Copy

New Delhi: In a major boost to real estate sector amid coronavirus pandemic, finance minister Nirmala Sitharaman on Monday during her Budget 2021 presentation announced a slew of measures for homebuyers. Giving a piece of good news, the Centre on Monday extended the tax exemption on affordable housing for a year.

In July 2019 Budget, the Centre had provided an additional income tax deduction of up to Rs 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.

Notably, houses that are valued under Rs 45 lakh comes under the affordable housing category. And if you are planning to buy a home under affordable housing scheme of Rs 45 lakh, you can get additional deduction for the interest paid on the affordable housing up to Rs 1.5 lakh under Section 80EEA of the Income Tax Act.

Sitharaman has already made it clear that the scheme will be valid till 31 March next year and 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.

It should also be noted that this is over and above the tax exemption of up to Rs 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 Rs 3.5 lakh on home loan interest rates now.

On the other hand, to provide affordable housing to migrant workers, the Centre has also announced the extension of tax holiday for one more year for affordable rental housing projects.

Now, the developers who are 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.

In an effort to help migrant workers and to promote affordable housing, the Budget 2021 has 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.