Home loan tax deduction restrictive for home buyers: Budget 2013
With release of Union Budget 2013, the Finance Minister has proposed to offer deduction in tax on home loans to first time home buyers. This initiative has brought some cheer for the home buyers as there was no significant tax reliefs in the past.
One can claim the deduction at tax only if your loan amount is less than Rs 25 lakh. Also, it has been mentioned that anyone who takes loan in between April 1, 2013 and March 31, 2014 can only be able to enjoy the benefit.
Further, the Union Budget 2013-14 has proposed a deduction of Rs 1 lakh on home loan interest under Section 80 E which will be given in addition to the existing tax benefit of Rs 1.5 lakh under Section 24.
The move is good but to avail this deduction, there is a certain eligibility. The value of the property purchased should not exceed Rs 40 lakh. However, if you avail a deduction of say Rs 60,000 in 2013-14, you will be allowed to claim the balance Rs 40,000 in 2014-15.
This move will only help the home buyers in tier II and III cities and residents in metro cities may not be able to gain from this move as housing is more targeted towards the mid and upper income segments.
The real estate industry and many experts are not happy with the TDS move. Also, they think that the decision to allow additional interest deduction of Rs 1 lakh to taxpayers taking home loans for the first house up to Rs 25 lakhs in the year 2013-14 is limited. It is because it boosts only affordable housing. Earlier, the same was there for home loans up to Rs 10 lakhs.
Maharashtra Chamber of Housing Industry (MCHI) has claimed that not a single of their demand has been fulfilled and instead several taxes have been introduced. It will further burden buyers as well as developers.
Also, Maharashtra Society and Welfare Association (MSWA) alleged that the budget is not encouraging for the housing sector. As, there is a shortage of 18 million houses in Mumbai and a fund of Rs 8 lakh crore is needed, the developers question the central govt as giving a mere Rs 2,000 crore for urban and Rs 6,000 crore for rural housing will not bridge the gap.
Developers in Mumbai were hoping that with the upcoming Union Budget 2013, it will improve investment volumes and general growth across real estate sector in Mumbai.
Mumbai real estate industry expects increased provisions of external commercial borrowings for low-cost housing, tangible tax relief for individuals and greater investments in infrastructure.
As buying a home is everyone’s dream, home buyers are keeping a track of the steps taken during the budget to decide their next course of action for investment on their dream home.
A well known developer in Mumbai said, Union Budget 2013-14 is expected to widen the tax benefits on housing loans. The real estate sector has been one of the major contributors to India’s GDP and is a growth driver for the economy.
Furthermore, another property consultant comments that with the budget, investment climate and business environment is going to improve in the real estate sector.
Also, the real estate developers’ body CREDAI had demanded for an inclusive housing policy and tax incentives. Presenting an inclusive housing policy, the developers’ body also demanded for housing sector to be accorded industry status.
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