Union Budget 2024: The Indian real estate sector, especially the affordable housing space, is expecting some big reform measures from the Modi government when FM Sitharaman will present her 7th union budget.
Union Budget 2024: Real estate sector stakeholders, including homebuyers in the affordable housing segment, are hoping for some major reform measures in this first budget of the Modi 3.0 regime to be presented on July 23. The affordable housing segment has been tremendously benefitted by the Pradhan Mantri Awas Yojana during the Modi 2.0 term. Now, there is growing expectation that Finance Minister Nirmala Sitharaman will not only reintroduce but also expand tax benefits under Section 80EEA.
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How much tax deduction benefit is available under Section 80EEA?
Section 80EEA of the Income Tax Act, 1961, which came into effect on April 1, 2020, provides a deduction for interest on loans taken for specific house properties. The maximum deduction under Section 80EEA is Rs 1,50,000 per financial year.
This deduction is calculated based on the interest paid on the home loan, with a maximum limit of Rs. 1.5 lakh per financial year, subject to specific conditions. It is important to note that this deduction is in addition to the deductions available under Section 24B for home loan interest payments.
Under the “Housing for All” initiative, the government extended the interest deduction for low-cost housing loans taken between April 1, 2019, and March 31, 2022. This led to the introduction of Section 80EEA, effective from Assessment Year 2020-21 (Financial Year 2019-20), which provides a higher interest deduction compared to its predecessor. Previously, Section 80EE allowed a deduction of up to Rs 50,000 for first-time home-buyers on loans sanctioned between April 1, 2016, and March 31, 2017. The new provision under Section 80EEA aims to offer greater financial relief and support for affordable housing.
Ahead of the budget, the real estate sector is hopeful for reform measures that will stimulate both demand and supply.
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Tax benefits on home loans for FY 2023-24 (AY 2024-25)
Tax benefits are one of the important considerations when planning to take a housing loan. Tax benefits on housing loans are provided under Section 24, Section 80C, and Section 80EE of the Income Tax Act, 1961.
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Here are tax benefits under various Sections of Income Tax Act, 1961.
Under Section 24 – Rs 2 lakh per annum
Under Section 80C – Rs 1.5 lakh per annum
Under Section 80EE – Rs 50,000
“As the Union Budget 2024 approaches, home buyers across India are eagerly anticipating meaningful reforms to make property ownership more accessible and affordable. The real estate sector has demonstrated resilience and significant growth potential, especially in the affordable housing segment, driven by initiatives like the Pradhan Mantri Awas Yojana. We expect the government to reintroduce and expand tax benefits under Section 80EEA, potentially extending the loan sanctioning qualification period to March 31, 2026,” says Ashwin Sheth, Chairman and Managing Director of Ashwin Sheth Group.
“This extension would enable more individuals to benefit from the affordable housing scheme, promoting property ownership and providing substantial tax advantages. The real estate industry is on the cusp of growth and with the right policy support, we can create a more dynamic and inclusive housing market. As we await the budget presentation on July 23, we remain hopeful for measures that will boost both demand and supply while fostering sustainable and positive development in the sector,” he added.
Highlighting that the first Budget of the Narendra Modi 3.0 government will also include a long-term blueprint for making India a developed nation by 2047, an Assocham-Primus paper listed areas that would require the government’s greater attention and priorities for realising the national goals.
While the Budget would attend to the immediate requirements of boosting consumption, investment and augmenting the supply side of the economy, it is also expected to lay a roadmap for the bigger goal of scaling up national income to a level of developed nations,” said Assocham President Sanjay Nayar.
