The last deduction limit (Rs 1.5 lakh per annum) for 80C section was last increased in 2014 and now it needs to be increased again.
Budget 2022 Expectations: Currently the real estate market looks favorable to property buyers. This is due to the price, which has been stagnant for many years and the interest rate on home loans is less than a decade and there are many housing options available. However, if tax breaks are increased in the upcoming Union Budget 2022, it could go a long way in boosting housing demand. Expectations from the budget are as follows …
Separate discount for basic home loan repayment
Basic repayment of home loan: Basic repayment of home loan is made under section 80C of the Income-tax Act, 1961. In addition to home loans, many other investments and expenses are excluded under 80C with an upper limit of Rs 1.5 lakh per annum. This limit has not been increased for a long time and is expected to be increased this year. Anuj Puri, chairman of Anarock Group, said: The last deduction limit (Rs 1.5 lakh per annum) under section 80C was increased in 2014 and now it needs to be increased. ”
Many others are of the opinion that a separate section should be introduced for deducting the principal repayment of the home loan. Kanika Gupta Shore, co-founder and COO of Square Yards, said, “The government should allow a separate deduction of Rs 1.50 lakh under 80C on the principal payment of home loan. Section 80C covers a number of investments / expenses, including PF, PPF and life insurance policies.
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Home loan interest cuts have increased
The current interest rate on home loans is less than 7 per cent per annum, but if one borrows more than Rs 30 lakh, he cannot claim a deduction on the full interest paid in the initial years. This is because the interest deduction limit under section 24 (b) of this Act is Rs. 2 lakhs per annum. “The tax rebate of Rs 2 lakh on interest rates on housing loans needs to be increased to at least Rs 5 lakh, which will create good demand for housing, especially in the affordable sector for the middle class,” Puri said.
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The definition of affordable housing should be redefined
To promote affordable housing and provide additional benefits to taxpayers, the government proposed additional deductions on home loan interest under sections 80EE and 80EEA. However, many have not been able to get additional discounts due to parameters like ceiling price, loan amount and size.
Puri said, “According to the Ministry of Housing and Urban Poverty Alleviation, affordable housing is described on the basis of the size, price and income of the buyer. For example, a house or flat up to 90 sq m in non-metro cities and towns, carpet area up to 60 m in large cities and affordable housing up to Rs 45 lakh in both cases. On the other hand, the definition of a central bank is based on a loan given by a bank to build a house or buy an apartment. Most importantly, the government should reconsider the importance of house prices in the city-based affordable housing budget. ” The definition is based on unit size, Puri says, but the price (up to Rs 45 lakh) is certainly not practical for most cities. For a city like Mumbai, the budget of Rs 45 lakh is very low, so this limit should be raised to Rs 60-65 lakh. The price revision will bring more homes under the affordable price tag, enabling more buyers to enjoy many benefits without ITC, such as 1 per cent GST rate, government subsidy and a total tax deduction of Rs 3.5 lakh on home loan interest payments. Yawa Puri said it would attract more buyers to buy the house.