Cheap thrill: Small homes won’t pinch

NEW DELHI: Continuing its focus on affordable housing, the Budget has extended the provision of deduction up to Rs 1.5 lakh in respect of interest on loan taken for the purchase of an affordable residential house property from taxable income under section 80EEA by one year up to March 31, 2022.
An affordable house refers to a property valued up to Rs 45 lakh.Only those assesses who do not own any other residential house property on the date of sanction of loan can avail the benefit.
This benefit is over and above the Rs 2 lakh deduction against interest paid on a home loan taken to buy a house under Section 24 of I-T Act. So, a buyer can get tax rebate on Rs 3.5 lakh interest paid on home loan. In fact, it would almost cover the entire interest to be paid in a year if one were to take a home loan of Rs 40 lakh to buy a house of Rs 45 lakh.
The benefit will bring down the effective interest rate to around 5.5% from the existing 7% if the taxpayer comes in the bracket of 20%, and the net EMI after adjusting for tax benefit would be around Rs 26,000 only.
The real estate sector was upbeat about the move saying it would keep demand buoyant for affordable housing. For developers, the customs duty on steel which has been reduced to 7.5% is also a welcome move.