Home Buyers 6 Reasons to Smile!
Hi I am Riddhi Your Financial Guide. I will provide you 6 reasons to smile.
6 REASONS TO SMILE!
Hi I am Riddhi
Your Financial guide.
You need reasons to smile. Right?
I would provide you 6 reasons to smile!
First of all, let us thank our economy- it accelerated to 7.6%(as per the data of Central Statistical Organisation) in 2015-16
Now let me take you to my classroom-
The budget provided a plethora of tax benefits on interest paid for first time home buyers. Let us see how much you can save -
1. Rs 50,000 p.a. additional interest deduction on a home loan of Rs 35 lakh!
What would be a major convenience to you as a first time home buyer? You can avail an additional interest deduction of Rs 50,000 on your home loan. But the loan amount should be up to Rs 35 lakh for a property worth Rs 50 lakh as the maximum.
As compared to Tier 1, home buyers of Tier 2 & Tier 3 cities would get the more benefit. The reason is that in Tier 2 and Tier 3 cities the prices of homes are less.
But you need to remember that the additional interest deduction is applicable only till Rs 35 lakh home loan. Once you cross this mark, there would be no additional deduction. Now the question is - you fall in which tax bracket? If you fall in the highest tax bracket of 30%, you would enjoy an additional Rs 15,450 tax saving.
Check your Home loan eligibility
2. Enhancement of rebate limit -
As per the provisions of section 87A of Income Tax Act, the existing Rs 2000 limit has been increased to Rs 5000/ for those whose total income who does not exceed Rs 500000/ p.a. This amendment will take effect from 1st April 2017 and is applicable in relation to 2017-18 assessment year.
3. Affordable Housing -
100 % deduction for profits to an undertaking for a housing project! Finance Minister said in the Union Budget, "In order to fuel activity in the housing sector, I propose to give 100 percent deduction for profits to an undertaking from a housing project for flats up to 30 SQ. meters in four metro cities and 60 SQ. meters in other cities, to be approved during June 2016 to March 2019, and is completed within three years of the approval.”
4. Slashing GST
With an eye to slash down the costs of houses, the government took a constructive decision and ordered for the GST exemption on housing projects effective from March 1, 2016. The exemption would be applicable in all housing schemes falling under the umbrella of “Housing For All”, provided that low-cost houses have a maximum carpet area of 60 square meters.
Know more about Housing for All
5. Excise Duty Exemption -
Initially, excise duty was exempted only for the concrete mix at the site; now onwards the exemption are applicable to ready mix concrete being used for the construction work.
6. Tax Relief for 5 Year Window
Going an extra mile, Hon’ble Finance Minister Arun Jaitley, also declared an increase in a time period for acquisition or construction of self-occupied house property for claiming a deduction of interest from 3 years to 5 years. This provision would provide relief to a large number of home buyers, facing a delay in the delivery of their houses by their respective developers. In this context, Boman R.Irani, Chairman, and Managing Director, Rustomjee Group, says, “The denial of this tax benefit was hurting some buyers. On account of several delayed approvals, most of the projects take more than 3 years to complete.”
We have discussed the amendments and additional provisions. However, keep into consideration that there are no changes on interest paid for under construction and second homes. Prior announcement of Union Budget 2016-17, Real estate players expected that the government would focus on pain points of the realty sector. In tune with their expectations, Hon’ble Arun Jaitley’s third union budget outlined the tax benefits provisions for the people of India.