The deduction ceiling under Section 80C has remained stagnant since 2014, at Rs 1.5 lakh annually. An adjustment is long overdue, especially to aid homebuyers. The real estate market currently favors property purchasers with stable prices, low home loan rates, and diverse housing options. However, the potential augmentation of tax benefits in the upcoming Union Budget 2022 could significantly boost demand.
Separate Deduction for Home Loan Principal Repayment
There’s a growing consensus among taxpayers and industry experts for a separate section in the tax code dedicated to home loan principal payments. Currently, these payments fall under Section 80C, which has a cap of Rs 1.5 lakh annually, limiting taxpayers’ ability to fully utilize benefits.
Anuj Puri, from the ANAROCK Group, stresses the necessity of revising the deduction limit, citing the stagnant nature of the current ceiling since 2014.
Kanika Gupta Shori, Square Yards’ co-founder and COO, advocates for a distinct deduction of Rs 1.50 lakhs on home loan principal repayments under Section 80C. This move would alleviate the burden on taxpayers and encourage home purchases.
Enhanced Deduction on Home Loan Interest
While current interest rates are favorable, the existing cap of Rs 2 lakh per year under Section 24(b) for interest rate deductions poses limitations, especially for those with loans exceeding Rs 30 lakh.
Puri suggests increasing the interest deduction cap to at least Rs 5 lakh, which could stimulate demand in the affordable and mid-segment housing categories.
Shori echoes this sentiment, emphasizing the need to alleviate the financial strain on homebuyers by raising the interest cap to Rs 5 lakh. This adjustment would make homeownership more attainable for a broader demographic.
In conclusion, the proposed changes in tax deductions for homebuyers present a promising opportunity to stimulate demand in the real estate sector and facilitate homeownership for many aspiring individuals.
Source: moneycontrol.com
