In her speech on Budget 2020, Finance Minister Nirmala Sitharaman discussed expanding the date on which home loans are eligible for affordable housing projects until 31 March 2021. The timeline for taking advantage of such home loans now is March 31, 2020. In the budgetary year 2019, the cumulative amount of interest charged on a tax-eligible housing loan from Rs 2 lakh earlier was raised to Rs 3.5 lakh, i.e. a raise of Rs 1.5 lakh to purchase a house under a housing policy.
For the first time, house buyers with a valuation of INR 45 lakhs were given an additional tax benefit. The 2020 budget will extend deductions available under section 80EEA to the next fiscal year, and provide the housing sector with a much-needed drive to meet the government policy goal of ' All Housing by 2022 '" said Naveen Kukreja. According to income tax legislation, the interest paid on the loan can be claimed by the individual as a gross total income deduction. The amount of interest that can be assumed as an allowance is currently capped at Rs 3.5 lakh for the purchasers under the affordable housing scheme.
In the interest on the residential lease of a house priced at Rs 45 lakh, the first home middle-class buyers would gain from an additional Rs 1.5 lakh (over and above the current Rs 2 lakh deduction), if the loan is made before 31st March 2021. Current legislation on income tax includes various home loan tax benefits, depending on the type of property. Normally, one can use a tax deduction on the principal amount owed on the home loan as well as the interest paid on it for a self-occupied residence. You claim a deduction under section 80C of the Income Tax Act for the principal (of the loan) reimbursed up to Rs 1.5 lakh per year and the interest paid is deductible up to Rs 2 lakh per annum in compliance with section 80C. Such deductions from the total gross income are approved before tax calculation, which cuts the total tax payable.