The Likely Impact of the 2021 Budget on Home Buyers
The Indian economy has been plagued by the COVID-19 Pandemic. Concerning it, the Union Budget 2021 was among the most anticipated events for taxpayers.
To initiate a recovery, the Finance Minister has come up with many tax exemptions, including home loan tax benefit.
Let’s know about a few reforms introduced in budget 2021 to benefit home loan customers!
Home loan exemptions at a glance
For years, the focus has been to ease off the financial burden on new and current home buyers as per the affordable housing plan.
It is already being given to the poor population of the country in the form of a housing loan interest rate subsidy.
It is available under the credit linked subsidy scheme of the Pradhan Mantri Awas Yojana (PMAY).
One can get up to 6.5% subsidy on home loan interest rate up to Rs.2.67 lakh.
A quick look at current tax benefits on home loans
- One of the key tax benefits of a home loan is that you can claim a deduction of up to Rs.1.5 lakh on principal portion repayment.
2. An amount of up to Rs.2 lakh could be claimed on the repayment of accrual and housing loan interest component.
3. Joint home loan applicants can avail of tax benefits on home loans on principal amount repayment of up to Rs.2 lakh. It is up to Rs.1.5 lakh on the interest part of the housing finance. They can enjoy such home loan tax benefits on behalf of both customers.
The only condition is that they both need to be the co-owner of the property that they have availed the loan for.
Other reforms announced at a glance
The latest budget also states the announcement of a tax holiday to help maintain the adequate supply of affordable homes.
Under section 80-IBA of the Income Tax Act, one can enjoy a 100% deduction of profits and gains from real estate sector development.
What’s more, dividends paid towards Real Estate Investment Trust (REIT). Also, dividends paid for infrastructure investment trust are exempted from TDS.
These provisions make the buying of a new home less expensive, especially for a first-time homebuyer.
