Income Tax News: The nation’s general budget preparations are well underway. Why not? Before the election season, this is the last budget of the Modi government 2.0. Even though this is only temporary, as always, we have high expectations for you. In order to draw voters, the government may also offer incentives like new programmes and tax breaks during election seasons. For this reason, the real estate industry also expects Nirmala Sitharaman, the Finance Minister, to soar. There has been a request for a home loan tax exemption. In addition to the general public, or taxpayers, the real estate industry is anticipated to gain greatly from this as well.
CREDAI’s Advocacy for Expanded Tax Exemption
The Confederation of Real Estate Developers Association of India (CREDAI) is advocating for an expansion of the tax exemption scope for home loans. Currently, there is a Rs 2 lakh cap on the amount exempt from home loan interest repayment. The amount ought to be raised to Rs 5 lakh. According to CREDAI, interest rates are extremely high. Reducing the repo rate until the second quarter of 2024 is a difficult task. The EMI for a home loan has been directly impacted by this. Monthly EMI payments for home purchases are higher. They stand to gain if they are granted a tax exemption in this scenario.
Income Tax Deduction on Principal Amount
Once the principal amount of a home loan is paid off, an income tax deduction of up to Rs 1.5 lakh is available. Stamp duty and registration fees may also be included, but they can only be subtracted once per year from the total amount paid. Only new home construction or acquisition should be funded by home loans.
Tax Exemptions on Home Loan Interest
Up to Rs 2 lakh in tax exemptions are available for home loan interest payments. The residence for which the loan has been obtained, regardless of whether you currently reside there or not. You won’t, however, be eligible for the tax deduction if you rented that house.
Impact of Tax Exemptions on Homebuyers
Middle-class homeowners will have more money to spend if their home loans are exempt from taxes, and this will encourage others to purchase homes as well. “Demand is necessary for growth in the sector, and the demand will increase only when the taxpayers are given some benefit in tax exemption,” says Manoj Gaur, Chairman of CREDAI. The interest rates on home loans have been rising steadily as a result of the increase in repo rates. There has been a noticeable rise. It is unlikely that housing demand will rise even if these stay constant. Consequently, the government will only be able to exempt taxpayers. The industry can only pick up steam after that.
Section 24(b) Tax Exemption
Tax relief is available on home loan payments under Section 24 of the Income Tax Act. EMI is divided into two sections. There are two parts: the principal part and the interest part. Section 24(b) allows for a tax exemption of up to Rs 2 lakh on the interest portion of a financial year. The principal portion is eligible for the deduction under section 80C, with a cap of Rs 1.5 lakh.
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