Budget 2020 Income Tax expectations: In its pre-Budget Memorandum, FICCI claims that it is "difficult" to purchase a house in a metro city or Tier 1 city at such "relatively low threshold" of not exceeding Rs 45 lakh.
Budget 2020 expectations India: The Modi government in its Union Budget 2020 should relax the eligibility conditions for availing tax benefit under Section 80EEA of the Income Tax Act, recommends FICCI in its pre-Budget memorandum. The Federation of Indian Chambers of Commerce and Industry or FICCI has stated that any move providing additional benefits to those who are looking to avail housing loan, would help the Centre achieve its ambitious target of housing for all by 2022.
In the Union Budget 2019, Finance Minister Nirmala Sitharaman had proposed an additional deduction of Rs 1.5 lakh on the interest paid for the home loan taken for residential house property. Section 80EEA introduced under Finance (No. 2) Act 2019 provides an additional deduction of up to Rs 1.5 lakh per annum of interest paid in the home loan. Under Section 24 of the I-T Act, the interest paid on housing loan up to Rs 2 lakh per annum for a self-occupied property qualifies for a deduction. If one is eligible for Section 80EEA tax benefit, the total amount of deduction for a taxpayer can, therefore, go up to Rs 3.5 lakh in one financial year.
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This additional deduction, under Section 80EEA, benefits the first time home buyers who are paying or will pay interest on a housing loan availed or one that will be availed during the period of April 1, 2019, to March 31, 2020, with stamp valuation of the property not exceeding Rs 45 lakh, the Industry body stated.
In its pre-Budget Memorandum, FICCI claims that it is “difficult” to purchase a house in a metro city or Tier 1 city at such “relatively low threshold” of not exceeding Rs 45 lakh. It has been said that this deduction is likely to benefit only lower-income borrowers in Tier 2 and Tier 3 cities as well as towns. Therefore, FICCI has suggested that the stamp duty value of the house property for the additional deduction should be enhanced from Rs 45 lakh to at least Rs 65 lakh for metro and Tier 1 cities such as Bengaluru, Hyderabad, Pune etc in Union Budget 2020.
Regarding the time period of availing such additional deduction on housing loan, FICCI says that existing deadline of March 31, 2020, should be extended in Budget 2020. Any individual, who will avail a housing loan post-March 31, 2020, would not be eligible for such deduction. FICCI said since the central government wants to achieve its ambitious target of housing for all by 2022, the period during which loan shall be sanctioned for availing the additional deduction should be extended till March 31, 2022, from existing March 31, 2020.
FICCI, therefore, wants two conditions to be relaxed – One, the stamp duty value of the house property should be enhanced, and Secondly, the last date for availing tax benefit should be extended.