Are you planning to buy a new home soon? Income tax benefit on affordable housing is all set to change with effect from April 1, 2022. Under Section 80EEA of the Income Tax Act, 1960, home buyers are eligible for an additional income tax deduction of Rs 1.5 lakh if the value of the property does not exceed Rs 45 lakh as on March 31, 2022. To avail this benefit, the house’s carpet area should be less than 60 sq m (645 sq ft) in metropolitan cities like Bengaluru, Chennai, Delhi NCR (limited to Delhi). , Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (the entire Mumbai Metropolitan Region). For any other city, the carpet area should not exceed 90 square meters (968 sq ft).
In Budget 2019, the Center had announced this additional income tax benefit of Rs 1.5 lakh under Section 80EEA for new home buyers, if they meet the prescribed criteria. This deduction is in addition to the deduction of Rs 2,00,000 for interest payment under section 24 (b) of the Income Tax Act.
The move is aimed at encouraging new home buyers to buy affordable housing. Later in Budget 2020 and 2021, the Center extended the benefit for one more year respectively, however, the Central Government has discontinued this tax-break for the upcoming financial year 2022-23 during Budget 2022.
Homebuyers can get additional benefit of Rs 1.5 lakh under Section 80EEA: Know how
Sudhakar Sethuraman, Partner, Deloitte India, pointed out that if a homebuyer wants to avail benefits under section 80EEA, the home loan should be sanctioned during the period from 1st April 2019 to 31st March 2022. The stamp duty value of the house property should be less than Rs 45,00,000. The taxpayer should be a first time home buyer and have taken loan from any financial institution during the said period. “It is important to note that taxpayers availing benefits under section 80EEA cannot avail the benefit of further deduction in respect of interest payment under any other provision of the Income Tax Act,” he said.
Elaborating on the rationale and benefits of Section 80EEA, Prashant Thakur, Senior Director and Head, Research, ANAROCK Group said, “Under the ‘Housing for All’ initiative, the Central Government has approved affordable housing loans taken during this period. Interest deduction for Rs. FY 2019-20 to March 2022. Under section 80EEA, affordable home buyers (property valued below Rs 45 lakh) got the benefit of deduction of Rs 1.5 lakh in addition to Rs 2 lakh for interest payment available under section 24(b). Income Tax Act. Overall, they can avail deduction of up to Rs 3.5 lakh towards interest on home loan.”
It is to be noted that if a homebuyer gets a home loan sanctioned by March 31, 2022 and gets the loan after April 1, 2022, he is liable to claim deduction under Section 80EEA for the entire tenure of the home loan. would be eligible for.
Homebuyers can avail income tax benefits from April 1, 2022
As the Section 80EEA deadline under the Income Tax Act ends on March 31, 2022, home buyers can now avail two other major deductions for their home loans.
1) Taxpayers shall be eligible for income tax deduction under section 24(b) of the Income Tax Act for an amount up to Rs 2,00,000 towards interest payment during the financial year. Sethuraman explained, “Where the house property is let out, any loss in excess of Rs 2,00,000 on account of interest payment can be carried forward for eight assessment years and against the rental income in subsequent years.” can be adjusted.”
2) In addition, the taxpayer will also be eligible to claim deduction under section 80C of the Income Tax Act for the payment of principal during the financial year.
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