Budget 2019 India: The tax-saving per year on the interest paid would be Rs 1,05,000 for a person in the 30 per cent tax bracket, Rs 70,000 for a person in the 20 per cent tax bracket and Rs 35,000 for a person in the 10 per cent tax bracket.
Union Budget 2019 India: To remove the hurdles like declining GDP growth, high joblessness, liquidity crisis in the NBFC sector, distress in the agriculture sector, etc, the country’s first woman Finance Minister Nirmala Sitharaman, in the Union Budget 2019 has taken several measures to boost the economy.
One of the government initiatives that draws favour of the Finance Minister is ‘Housing of All’. Giving a tax-saving incentive to the buyers, Sitharaman has proposed additional deduction Rs 1.5 lakh over the existing limit of Rs 2 lakh on a loan taken up to March 31, 2020 for buying affordable housing for all houses of value up to Rs 45 lakh.
A new section 80EEA in the Income Tax Act is proposed so as to provide a deduction in respect of interest up to Rs 1.5 lakh on loan taken for residential house property from any financial institution subject to the following conditions:
(i) loan has been sanctioned by a financial institution during the period beginning on the April 1, 2019 to March 31, 2020;
(ii) the stamp duty value of house property does not exceed Rs 45 lakh;
(iii) assessee does not own any residential house property on the date of sanction of loan.
So, in case a person buys an affordable house for up to Rs 45 lakh by taking a home loan, he/she will get a deduction up to Rs 3.5 lakh on the interest paid on the home loan each year.
The tax-saving per year on the interest paid would be Rs 1,05,000 for a person in the 30 per cent tax bracket, Rs 70,000 for a person in the 20 per cent tax bracket and Rs 35,000 for a person in the 10 per cent tax bracket.
As real estate is one of the major contributors to the GDP growth as well a prospective job creator, a push to the lagging sector would resolve the issues of growth and job creation quite a bit.
This would serve as a big incentive to buy an affordable house for up to Rs 45 lakh in the form of tax savings as a person in the 30 per cent tax bracket would able to save additional tax of Rs 45,000 over buying an expensive house, while those in the 20 per cent tax bracket will save Rs 30,000 and those in the 10 per cent tax bracket will save Rs 15,000.
“The government announced major tax benefits that will help stimulate demand for affordable housing. Interest deduction up to Rs 3.5 lakh for affordable housing (priced up to Rs 45 lakh) as against Rs 2 lakh earlier will now be available until March 31, 2020. This can help attract first-time home buyers,” said Anuj Puri, Chairman – ANAROCK Property Consultants.