High interest payment, delayed delivery; home buyers seek these reliefs from budget

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Updated: June 18, 2019 11:39:31 PM

India Union Budget 2019: Home buyers have clear expectations from the maiden budget of finance minister Nirmala Sitharaman.

Home Loan, Union Budget, Interest Payment, Nirmala SitharamanHome buyers seek specific relief from union budget.

Union Budget 2019: Home buyers have high expectations from finance minister Nirmala Sitharaman. They expect the government to tweak the rules related to deductions given to home buyers on account of interest payment on home loan. The Union government allows deduction of Rs 2 lakh from a tax payer’s income in a financial year on interest payment for home loan, however, tax payers cannot claim benefit till they get possession of their homes. This rule puts them at a disadvantage as Indian real estate sector is mired in inordinate delays running for 5-10 years that also deprives home buyers any relief that becomes due on account of interest payment.

Middle class home buyers like 42 year old Abhishek Singh who is employed in public sector are clear about their expectations in this budget.

Forty-two year old Abhishek Singh who is employed with Parliament of India says that the ceiling of Rs 2 lakh a year towards interest payment on home loan is not in sync with the market realities.

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“In areas like Delhi-NCR and other metros, a basic two-room housing unit costs a minimum of Rs 40-50 lakh. Interest payment on home loan amounts for the biggest chunk in the initial years but the entire amount of interest payment that could be around Rs 3-4 lakh a year or more is not deducted due to the ceiling of Rs 2 lakh,” he said.

While talking to Financial Express Online, Abhishek Singh raised another issue. He says the government’s policy to defer the deductions till the time of actual possession of the housing unit is loaded against home buyers.

“Real estate sector has seen long and inordinate delays running for several years and in some cases for 8-10 years or more. It puts home buyers at a disadvantage as they are compelled to pay both rent and home loan while waiting for the delivery of the house to avail the deduction on account of interst payment on home loan,” Abhishek Singh told Financial Express Online.

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“This deduction should be given to tax payers in the same financial years when the actual payment is made. It should not be deferred till the delivery of the property which may be delayed by several years due to unforeseen reasons,” suggested Abhishek while talking about the expectations of middle class home buyers from the maiden budget of finance minister Nirmala Sitharaman.

However, another public sector employee Vivek Kumar who is employed in a central PSU in Delhi has a different take.

“Flats are extremely costly in metro cities and a prospective buyer will not delay his decision to acquire a property just because he or she will get Rs 2 lakh a year deduction on interest payment on home loan,” Vivek Kumar told Financial Express Online.

“The Government should instead raise the standard deduction,” he said.

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