Boosting Affordable Housing: Hike Home Loan Interest Deduction to ₹3 Lakh in Old Tax Regime
Property market experts are urging the government to increase the home loan interest deduction limit to ₹3 lakh in the old tax regime to revive the affordable housing market.
Affordable HousingHome Loan Interest DeductionReal EstateTax ReformBudget 2023Real EstateJan 30, 2025
Property market experts are now placing their hopes on the upcoming budget, advocating for a significant hike in the home loan interest deduction limit to ₹3 lakh in the old tax regime.
This move is seen as a crucial step towards revitalizing the affordable housing market and providing much-needed relief to homebuyers.
The home loan interest deduction is a provision under Section 24 of the Income Tax Act, 1961, which allows individuals to claim a tax deduction on the interest paid on loans taken for the purchase, construction, or renovation of a house.
Currently, the limit for this deduction is ₹2 lakh, which has been in place for several years.
However, with the rise in property prices and interest rates, this limit has become inadequate for many homebuyers, especially those in the affordable housing segment.
Importance of Affordable HousingAffordable housing is a critical component of urban and rural development, ensuring that all citizens have access to decent and safe living conditions.
The government has already taken significant steps to promote affordable housing through initiatives like the Pradhan Mantri Awas Yojana (PMAY), but more needs to be done to make homeownership a reality for the middle and lower-income groups.
Impact of the HikeBy increasing the home loan interest deduction limit to ₹3 lakh, the government can provide substantial financial relief to homebuyers.
This would not only reduce their financial burden but also stimulate demand in the housing market.
Here are some potential benefits
- Reduced Financial Burden A higher deduction limit would mean lower tax outgo for homebuyers, making it easier for them to manage their monthly EMI payments.- Increased Demand The financial relief would encourage more people to buy homes, thereby increasing demand and boosting the real estate sector.- Economic Growth A thriving housing market can contribute to overall economic growth by creating jobs and generating business opportunities.
Industry ResponseReal estate developers and industry experts are highly supportive of the proposed hike.
According to a spokesperson from the National Real Estate Development Council (NAREDCO), 'Increasing the home loan interest deduction limit to ₹3 lakh would be a game-changer for the affordable housing market.
It would provide a much-needed boost to the sector and help in creating a more inclusive society.'
Challenges and ConsiderationsWhile the hike in the deduction limit is beneficial, it is essential to address other challenges that the real estate sector faces.
These include
- Property Prices High property prices remain a significant barrier to affordability.
The government needs to work on policies that can bring down property prices and make housing more accessible.- Interest Rates Fluctuations in interest rates can impact home loan EMIs.
The Reserve Bank of India (RBI) should ensure stable and low-interest rates to support homebuyers.- Housing Finance Access to housing finance is crucial for first-time homebuyers.
The government should encourage banks and financial institutions to offer more affordable home loan products.
ConclusionThe proposal to increase the home loan interest deduction limit to ₹3 lakh in the old tax regime is a positive step towards reviving the affordable housing market.
It would provide financial relief to homebuyers, stimulate demand, and contribute to economic growth.
However, it should be part of a broader strategy that includes addressing property prices, interest rates, and access to housing finance.
The real estate sector and homebuyers are eagerly waiting for the government's response to this proposal.
It is hoped that the upcoming budget will bring in much-needed reforms to make homeownership a reality for more Indians.
Frequently Asked Questions
What is the current limit for home loan interest deduction under the old tax regime?
The current limit for home loan interest deduction under the old tax regime is ₹2 lakh.
Why is there a need to increase the home loan interest deduction limit?
The current limit of ₹2 lakh has become inadequate due to the rise in property prices and interest rates, making it harder for homebuyers to manage their EMIs and tax outgo.
How would increasing the limit to ₹3 lakh benefit homebuyers?
Increasing the limit to ₹3 lakh would provide substantial financial relief to homebuyers by reducing their tax outgo, making it easier to manage monthly EMI payments, and stimulating demand in the housing market.
What other challenges does the real estate sector face?
Other challenges include high property prices, fluctuations in interest rates, and limited access to housing finance for first-time homebuyers.
What is the Pradhan Mantri Awas Yojana (PMAY)?
The Pradhan Mantri Awas Yojana (PMAY) is a government initiative aimed at promoting affordable housing and ensuring that all citizens have access to decent and safe living conditions.
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