Are you planning to buy a new home soon? The income tax benefits on affordable housing will change from April 1, 2022. Under Section 80 EEA 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 until March 31, 2022. To take advantage of this benefit, the carpet area of the house must be less than 60 square meters (645 sq ft) in metropolitan cities Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (the entire Mumbai metropolitan region). For other cities, the carpet area cannot exceed 90 square meters (968 sq ft).
In the 2019 budget, the center had announced this additional income tax benefit of Rs 1.5 lakh for new home buyers under Section 80 EEA if they meet the prescribed criteria. This deduction is in addition to the deduction of Rs 2,000,000 for interest payments under Section 24(b) of the Income Tax Act.
The measure is intended to encourage new home buyers to buy affordable housing. Later in the 2020 and 2021 budget, the Center extended the benefits for another year respectively. However, the Union government has withdrawn this tax credit for the coming fiscal year 2022-23 during the 2022 budget.
Home buyers can get an additional benefit of Rs 1.5 Lakh under section 80EEA: know-how
For a home buyer to take advantage of the benefits under Section 80EEA, the home loan must be approved in the period from April 1, 2019 to March 31, 2022, explains Sudhakar Sethuraman, partner, Deloitte India. The value of the stamp duty of the house must be less than Rs 45,000,000. The taxpayer has to buy a house for the first time and the loan is made during the above-mentioned period from a financial institution. It is imperative to note that the taxpayer taking advantage of the benefit under Section 80EEA will not be able to re-use the deduction in respect of the interest payments under other provisions of the Income Tax Act, he added. to.
Prashant Thakur, Sr. Director and Chief of Research, ANAROCK Group explained the rationale and benefits of Section 80EEA: “Under the ‘Housing for All’ initiative, the central government has extended the interest deduction for affordable housing loans taken in the period between FY 2019-20 to March 2022. Under Section 80EEA, the Affordable Home Buyers (property valued less than Rs 45 lakh) were given the benefit of a deduction of Rs 1.5 Lakh in addition to Rs 2 lakh for interest payment available under Section 24(b) of the Income Tax Act. In total, they could avail of deductions up to Rs 3.5 lakh for interest on a home loan.”
It should be noted that if a home buyer receives a home loan by March 31, 2022 and receives the loan after April 1, 2022, he or she is eligible for the Article 80 EEA deduction for the entire term of the home loan.
Income tax benefits Home buyers can make use of April 1, 2022
As the Section 80 EEA deadline under the Income Tax Act expires on March 31, 2022, home buyers will now be able to take advantage of two other major deductions for their home loans.
1) Taxpayers are eligible for income tax deduction under Section 24(b) of the Income Tax Act up to Rs 2,000,000 in interest payments during the fiscal year. “If the house is rented out, losses in excess of Rs 2,000,000 due to interest payments can be carried forward during eight assessment years and can be offset against rental income in subsequent years,” explains Sethuraman.
2) In addition, taxpayers can claim a deduction during the financial year under Article 80C of the Income Tax Act for repayment of the principal.
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