Can Homebuyers Expect Tax Rebate from Budget'24?
Increased tax exemptions on home loan interest and principal repayments in Budget 2024-25 could greatly reduce tax burdens for homebuyers
New Delhi: Preparations for the first budget of the Modi 3.0 government are in full swing. Finance Minister Nirmala Sitharaman will present the complete fiscal year 2024-25 budget on July 23. There are high expectations from the budget. Not only from the general public but also from various sectors. People closely tie one such expectation to their dreams of owning their own homes. That is, under the government’s ‘Housing for All’ mission. Everyone hopes that the budget might specifically address this issue. Potentially increasing tax exemptions on home loans.
The National Real Estate Development Council (NAREDCO) and experts in the real estate sector propose raising the tax exemption on home loan interest payments from ₹2 lakh to at least ₹5 lakh. Section 24 of the Income Tax Act provides tax benefits to taxpayers who purchase homes using housing loans and make interest payments. The current exemption limit for self-occupied properties is ₹2 lakh.
In the past 2-3 years post Covid, property prices have rapidly increased. Meanwhile, home loan interest rates are also high. In such a situation, experts in the real estate sector believe that the ₹2 lakh tax benefit on housing loan interest is not enough. They insist that this limit should be increased to at least ₹5 lakh.
Hopes ahead for homebuyers, real estate sector?
If the government increases tax exemptions on interest payments for home loans in the budget, it could prove to be a significant step forward for both homebuyers and the real estate sector. Higher tax exemptions could encourage more people to purchase homes. Thereby, boosting the real estate sector and helping the government achieve its goals. Additionally, besides tax exemptions on interest payments for home loans, homebuyers also benefit from claiming a deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act against principal repayments.
However, real estate experts consider this deduction insufficient due to the increasing value of properties. They suggest increasing the limit for claiming deductions against principal repayments to at least ₹2.5 lakh in the budget. Or introducing a separate section for deductions against principal repayments.
If tax exemptions on interest and principal repayments for home loans increase in Budget 2024-25, it could significantly help homebuyers reduce their tax liabilities. This, in turn, could lead to an increase in disposable income and spending capacity, potentially boosting economic growth.