Budget 2017 should look at providing some tax relief to homebuyers, recommends FICCI. In its pre-Budget memorandum, FICCI has urged Finance Minister Arun Jaitley to raise the deduction for interest paid under Section 24 to Rs 3 lakh. “The deduction available under section 24 of the Act is to a maximum limit of Rs 2,00,000/- for interest on loan taken for acquisition/construction of self-occupied house property. Given the rising interest rates and the increase in property prices and also to spur the demand for housing, it is recommended the exemption should be increased to at least Rs 3,00,000/- per annum,” FICCI says.
The Federation of Indian Chambers of Commerce and Industry (FICCI) also feels that tax benefits should be made available earlier in the loan tenure. “Deduction in respect of interest on housing loan is allowed only after the possession of the property is handed over to the buyer and the interest payments for the construction period are allowed as deduction over a period of five years, starting from the previous year in which property is acquired or constructed. Therefore, the tax benefit is available to the taxpayer only after three to four years from the date the housing loan was raised by him despite regular interest payments embedded in EMI during the construction period,” FICCI points out.
“To meet the housing need for all, it is desirable that the deduction towards interest on housing loan should be allowed in the previous year in which interest is paid by the taxpayer, irrespective of the year in which the property is acquired or constructed, provided that the house is not sold or transferred within a period of five years from the date of construction/acquisition,” it says.
FM Jaitley is likely to present the Budget 2017 on February 1. The Budget is special not only for the fact that it has been preponed, but more importantly because it comes within months after Modi government’s massive demonestisation drive. Most analysts and economists expect Budget 2017 to be tax-payer friendly, especially given the pain that common man has faced after old Rs 500 and Rs 1000 notes ceased to be legal tender money.