April 1, 2022. Here are the key rules homebuyers must know
Are you planning to buy a new house soon? The income tax benefits on the affordable housing is all set to change, starting from April 1, 2022. Under Section 80 EEA of the Income Tax Act, 1960, homebuyers 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 till March 31, 2022. To avail this benefit, the carpet area of the house needs be under 60 square meter (645 sq ft) in metropolitan cities of Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region). For any other cities, the carpet area should not exceed 90 square meter (968 sq ft).
In Budget 2019, the Centre had announced this additional income tax benefit of Rs 1.5 lakh for new homebuyers under Section 80 EEA if they fulfill the prescribed criteria. This deduction is over and above the deduction of Rs 2,00,000 for interest payments under Section 24(b) of the Income Tax Act.
The move aims to encourage new homebuyers to purchase affordable housing. Later in Budget 2020 and 2021, the Centre extended the benefits for one more year, respectively However, the Union government has discontinued this tax-break for the upcoming financial year 2022-23 during Budget 2022.
Homebuyers can Get Additional Benefit of Rs 1.5 Lakh Under Section 80EEA: Know How
If a homebuyer wants to avail the benefits under the Section 80EEA, the home loan must be sanctioned during the period April 1 2019 to March 31 2022, explained Sudhakar Sethuraman, partner, Deloitte India. The stamp duty value of the house property should be less than Rs 45,00,000. The taxpayer should be a first-time home buyer and the loan is availed from a financial institution during the above-mentioned period. “It is imperative to note that the taxpayer availing the benefit under Section 80EEA cannot again avail the deduction in respect of the interest payments under any other provisions of the Income Tax Act,” he added.
Explaining the rationale and benefits of Section 80EEA, Prashant Thakur, Sr. director and head, research, ANAROCK Group said, “Under the initiative ‘Housing for All’, the central government extended the interest deduction for affordable housing loans taken during the period between FY 2019-20 to March 2022. Under Section 80EEA, the affordable homebuyers (property valued less than Rs 45 lakh) got the benefit of 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 deductions up to Rs 3.5 lakh for interest on home loan.”
It must be noted that if a homebuyer gets home loan sanctioned by March 31, 2022 and gets the loan after April 1, 2022, he or she will eligible to claim the deduction under Section 80 EEA for the entire tenure of the home loan.
Income Tax Benefits Homebuyers Can Avail from April 1, 2022
As the deadline for Section 80 EEA under the Income Tax Act, ends on March 31, 2022, homebuyers can avail two other key deductions for their home loans from now on
1) Taxpayers will be eligible for income tax deduction under Section 24(b) of the Income Tax Act for an amount up to Rs 2,00,000 towards interest payments during the financial year. “Where the house property is let-out, any losses exceeding Rs 2,00,000 on account of interest payments can be carried forward for eight Assessment Years and can be adjusted against rental income in subsequent years,” Sethuraman explained.
2) In addition, taxpayers shall also be eligible to claim deduction under section 80C of the Income Tax Act for principal repayments during the financial year.
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