Budget 2019: Additional deduction of up to Rs 1.5 lakh for interest paid on home loans borrowed up to March 2020

New Delhi: In order to provide further impetus to the affordable housing segment, Finance Minister Nirmala Sitharaman on Friday proposed to allow an additional deduction of up to Rs 1.5 lakh for interest paid on loans borrowed up to March 31 2020 for purchase of an affordable house  valued  up to Rs 45 lakh.  

“Therefore, a person purchasing an affordable house will now get an enhanced interest deduction up to Rs 3.5 lakh. This will translate into a benefit of around Rs 7 lakh to the middle class home-buyers overtheir loan period of 15 years,” the Finance Minister said while presenting her maiden Budget.

The FM said that for realisation of the goal of 'Housing for All' and affordable housing, a tax holiday has already been provided on the profits earned by developers of affordable housing. Also, interest paid on housing loans is allowed as a deduction to the extent of  Rs 2 lakh in respect of self-occupied property.

The Finance Minister also proposed that several reform measures would be taken up to promote rental housing. Current Rental Laws are archaic as they do not address the relationship between the Lessor and the Lessee realistically and fairly. A Model Tenancy Law will also be finalized and circulated to the States, she added.