A Cause For Cheer

The introduction of additional tax benefit in this year’s union budget makes it easier to buy a home.

- Naveen Kumar

Homebuyers have a reason to cheer after Finance Minister Nirmala Sitharaman presented the Union Budget on July 5. In a bid to boost Housing for All, the government has introduced an additional income tax deduction of 1.5 lakh on the interest paid on home loan under Section 80EEA. It comes with a few riders, though, but before we get there, let us look at the current scenario.

All existing borrowers are already eligible for an annual deduction of up to 2 lakh under Section 24(b) until their loans are paid off. The additional deduction will be over and above the 2 lakh limit. “Deductions under Sections 24(b) and 80EEA are independent of each other, and the interest you are paying cannot be considered for both sections. However, you can claim an aggregate deduction of 3.5 lakh per year (using each Section separately),” says Kuldip Kumar, Partner and Leader, Personal Tax, at PwC India. You can claim the additional benefit only when the annual interest on your home loan exceeds 2 lakh. Otherwise, your tax benefit will be limited to Section 24(b) as before.