The Government started the ambitious Housing For All By 2022 Scheme, for a very important mission. The focus of this scheme is affordable housing. In the previous Union Budget, affordable housing got the infrastructure status. For the growth and prosperity of the Nation, affordable housing is very important.
To make Housing For All By 2022 a reality, Prime Minister Narendra Modi started the Pradhan Mantri Awas Yojana (PMAY). The ambitious PMAY was launched way back in June 2015. Under the scheme, Pucca houses will be constructed with water facility, sanitation and round-the-clock electricity supply. If the floor, roof and exterior walls of the house are made with high-quality material, these houses are called Pucca houses.
PMAY aims to cover people who belong to the EWS (Economically Weaker Sections) and Lower Income Groups whose annual income does not exceed Rs 6 Lakhs a year. Finance Minister, Arun Jaitley, will present the Union Budget 2018-19 on February 1st 2018. This Budget will bring cheer to a lot of home buyers.
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Previous budgets have always focused on housing for the common man. First-time home buyers have been given tax incentives. Yet, more needs to be done. Project approvals, construction delays, completion hassles....the list is endless. Budget 2018 should look to solve these problems.
1. Interest deduction for self-occupied property must be increased
If you avail a home loan, you get tax deductions up to Rs 1.5 Lakhs a year under Section 80C, on EMI (Principal) of the home loan. You also get a deduction for interest paid on home loans for a self-occupied property, up to Rs 2 Lakhs a year under Section 24.
Today, buying a house costs a lot of money. Do you think a deduction for interest paid on home loans for self-occupied property up to Rs 2 Lakhs a year is enough?
It is important that the deduction for interest paid on home loans for self-occupied property be increased to Rs 3 Lakhs a year. This would be good for the real estate sector in India and home buyers.
You are eligible for a deduction under Section 80C up to Rs 1.5 Lakhs a year. This is a combined deduction for certain eligible investments, premiums paid on life insurance plans and EMI (Principal) repayments on the home loan.
Do you think a tax deduction of just Rs 1.5 Lakhs a year under Section 80C, shared with other tax-saving investments, is sufficient for home loans? Would it not be great if there was a separate deduction for EMI (Principal) on home loans?
You get a tax deduction on home loan interest paid towards an under-construction property. This deduction is available as 5 equal instalments starting from the year, construction of the property is completed. This deduction is included within Section 24, where you get a deduction on EMI (Interest) paid on home loans for a self-occupied property, up to Rs 2 Lakhs a year. This makes it very difficult to claim a deduction on interest paid for the current year, as there's no room left to claim this deduction under Section 24.
Would it not be great if there was a separate deduction for pre-construction period interest payments?
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If you are a first-time home buyer, you get an additional deduction on home loan interest up to Rs 50,000 a year, under Section 80EE of the income tax act. This is in addition to the Rs 2 Lakh a year deduction, on EMI (Interest) on home loans for self-occupied property, under Section 24.
Only first-time home buyers whose home loans were sanctioned between April 1st 2016 to March 31st 2017, get this benefit. Another condition is the value of the property must not exceed Rs 50 Lakhs.
Would it not be good if this deduction could be extended for first-time home buyers, whose home loans are sanctioned beyond March 31st 2017? If you buy a house in a tier 1 and a tier 2 city, the cost of property is much more than Rs 50 Lakhs. Would it not be good if the value of the property could be extended beyond Rs 50 Lakhs to get this benefit?
Yes, this could be a very good wish list for first-time home buyers. A home is very important for the common man and you definitely expect some goodies for home buyers in the Union Budget 2018-19. Be Wise, Get Rich
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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