If you still do not own any house then Budget 2016 must be like an angel for you. Modi Government in this Budget has given opportunities to buy an affordable house. Additional deduction of Rs. 50000 for first time home buyers.

FM Arun Jaitley proposed to allow deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned during the next financial year for first-time home-buyers, provided the value of the house doesn’t exceed Rs 50 lakh. In addition, in a relief to individual tax payers, Jaitley also increased the tax deduction limit to Rs 60,000 per annum from the current Rs 24,000 on housing rent.

 

A home buyer in India is entitled to claim both the interest and principal components of home loan repayments for tax benefits. Currently interest payable on a ‘self-occupied’ house is subject to a maximum deduction of Rs 2 lakh under the head ‘Income from House Property’. With this Budget, this limit has been increased to 2.5lakh.

 

Moreover, as per the current provision, if the construction of the property does not get completed within 3 years from the end of financial year in which loan was taken then the benefit of this deduction gets reduced to Rs. 30000 only.

 

For the 2016-17, Budget proposes tax relief on interest payment on home loan if the property bought, or under construction, is completed within 5 years from the end of the financial year in which the loan was availed instead of the current 3 years.

 

 To boost supply of affordable homes, FM proposed 100 per cent deduction for profits to an undertaking from a housing project for flats up to 30 sq metres in four metros and 60 sq metres in other cities. The deduction would be applicable on the projects approved during June 2016 to March 2019, and completed within three years of the approval. Minimum alternate tax (MAT) will, however, apply to these undertakings.

For any assistance visit taxmantra.com.

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