Budget 2016: Expectations of home buyers
The deduction for interest on housing loans needs to increase from the current limit of Rs 2 lakh.
Zee Media Bureau
New Delhi: The real estate industry has sought more tax incentives and lower interest rates for the home buyers in the upcoming Budget 2016 to revive demand.
Besides, it sought infrastructure status for housing. In order to 'Make housing for all a Reality' the government should look into relaxation of taxes, incentivise cheaper financing for the developers and build adequate infrastructure".
Here are some changes that the Home Buyers expect in this year’s Budget:
Hiking the cap on interest on home loan
We have great expectations from this budget, starting with support to incentivize affordable housing and permit higher tax exemption limits on interest and principal repayments for home buyers.
The deduction for interest on housing loans needs to increase from the current limit of Rs 2 lakh considering the significant rise in rates for residential properties over the past few years. To provide relief to the tax payer this limit should be increased to at least Rs 3 lakh. This will give impetus to the housing industry, thus boosting the economy in the long run.
Section 24 of the Income Tax Act, allows for tax deduction on payment of interest. However, the proviso in the section states that if the property if not acquired or constructed within 3 years from the end of the financial year in which capital was borrowed when the loan was taken, the deduction of Rs 2 lakh would not be available. This is a restrictive provision that curtails the flow of benefit under the Section. Delays on account of approvals and other procedural impediments, warrant that the time period be extended from 3 to minimum of 5 years.
Payment of principal amount on home loan
There is a demand from a wider section that a separate provision should be made for the principal loan amount which is currently included in 80C [under which maximum limit is Rs 1.5 lakh (all inclusive)].
Present limit for deduction under section 80C is Rs 1 lakh need to be revised to a limit of minimum Rs 3 lakh.