Budget 2024: Home Loan Borrowers Hope for Tax Relief Amid Rising Property Prices
As property prices and credit costs surge, home loan borrowers are counting on Finance Minister Nirmala Sitharaman to introduce key changes that could provide much-needed relief and boost the housing market.
Budget 2024Home Loan InterestTax BenefitsHousing MarketNirmala SitharamanReal Estate NewsJul 20, 2024
The primary demand of borrowers is an increase in the tax deduction on home loan interest under Section 24(b) of the Income-Tax Act, from the current ₹2 lakh to ₹5 lakh. This adjustment is essential to stimulate demand for budget homes, which have seen a slump in sales post-pandemic.
Experts also argue for a separate section dedicated to home loan principal repayments, with a tax deduction limit of up to ₹3 lakh. This change could simplify the tax-saving process for borrowers and encourage more people to invest in housing.
Additionally, experts believe that reinstating the deduction of up to ₹50,000 on home loan interest for first-time homebuyers, which ended after March 2022, would reduce the cost of homeownership and support the government's goal of making housing accessible to all.
The Credit-Linked Subsidy Scheme (CLSS), which ended in March 2022, provided subsidized interest rates for housing loans to economically weaker sections and middle-income groups. Its reinstatement could incentivize more homebuyers in the affordable housing segment.
Tax experts suggest making the new regime more appealing by introducing tax deductions on home loan interest for first-time homebuyers of self-occupied properties. Furthermore, revising the qualifying cost of affordable properties, especially in high-cost cities like Mumbai, could better reflect market realities and make subsidies under the Pradhan Mantri Awas Yojana (PMAY) more impactful.
The Pradhan Mantri Awas Yojana (PMAY) is a flagship mission of the Indian government aimed at providing affordable housing to all by 2022. The Indian government has introduced various initiatives to boost the housing market, including the Credit-Linked Subsidy Scheme (CLSS).\n\nWith significant changes introduced in the previous fiscal year, such as an increased tax rebate limit and a reduction in the number of tax slabs, tax experts are hopeful that the upcoming budget will bring in more relief for home loan borrowers.
Frequently Asked Questions
What is the current tax deduction limit on home loan interest?
The current tax deduction limit on home loan interest is ₹2 lakh under Section 24(b) of the Income-Tax Act.
What is the demand of home loan borrowers from the upcoming budget?
Home loan borrowers are demanding an increase in the tax deduction on home loan interest from ₹2 lakh to ₹5 lakh and a separate section for home loan principal repayments with a tax deduction limit of up to ₹3 lakh.
What was the Credit-Linked Subsidy Scheme (CLSS)?
The Credit-Linked Subsidy Scheme (CLSS) was a scheme that provided subsidized interest rates for housing loans to economically weaker sections and middle-income groups.
What is the Pradhan Mantri Awas Yojana (PMAY)?
The Pradhan Mantri Awas Yojana (PMAY) is a flagship mission of the Indian government aimed at providing affordable housing to all by 2022.
What is the current qualifying cost of affordable properties?
The current qualifying cost of affordable properties is ₹45 lakh, which is seen as insufficient given the steep property prices.
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