Carrying on with its aim to achieve ‘Housing for All’ by 2022, Finance Minister, Nirmala Sitharaman in her Union Budget 2020 speech proposed to extend the tax deduction allowed under Section 80EEA of the Income Tax Act, 1961. Before the announcement, the deadline to avail this additional home loan tax benefit was till March 31, 2020. Post the announcement, the deadline to avail tax deduction on the home loan interest has been extended to the next financial year, i.e., till March 31, 2021.
Last year, the maximum tax deduction you could claim on home loan interest amount was raised from Rs. 2 lakh to Rs. 3.5 lakh. The additional increase of Rs. 1.5 lakh was for home loans taken to buy a house under affordable housing scheme. This home loan tax benefit can be availed only by first-time homebuyers who are buying a house having stamp duty value of up to Rs. 45 lakh.
How will it benefit homebuyers?
The extension of the tax benefit will help first-time homebuyers enjoy the benefits of interest subvention under the Pradhan Mantri Awas Yojana (PMAY) – Credit Linked Subsidy Scheme (PMAY-CLSS) and additional tax benefits.
How will it benefit developers?
Real estate developers also get up to March 2021 deadline to claim a 100% tax deduction for affordable housing projects under section 80IBA. This extension will help in ensuring the continued interest of developers in the construction of their projects and help achieve the objective of achieving ‘Housing for All’ initiative by 2022.
Read Also: RERA Act