By Accommodation Times News Services
If you are thinking to buy your first home then to get the benefit on additional tax against the interest on home loans, the home buyers should complete all the legal formalities by March 31, as an exemption available to taxpayers will lapse in the current financial year which enables them to reduce the interest paid from the taxable income. The reduction can be up to Rs 1.5 lakh under section 24 of the Income Tax Act and up to Rs 1 lakh under section 80EE against the interest paid on home loan.
As per the act the benefits under section 80EE are applicable only to first home buyers of a value of Rs 40 lakh, provided the maximum loan amount is Rs 25 lakh. The second provision is due to lapse. But those who have already borrowed need not worry. With this provision, one could avail a deduction of Rs 2.5 lakh from his taxable income against the interest paid on home loan. After the provision lapses, the first home buyer, falling under 30% bracket, will lose Rs 30,000 and those who are under 20% bracket will lose Rs 20,000.
The provision was introduced in the 2013-14 budget, although the benefit was available only for a year to provide a much-needed impetus to housing, which has been hit by rising interest rates and falling real income levels.
The current financial minister P. Chidambaram has shown his will in re-introducing the benefits, but he did not wish to amend the direct tax provisions in the Vote On Account. The benefits will not be reintroduced till the first three-four months of 2014-15. Similarly, the benefit of income tax rebate to companies which are involved in power generation and distribution will also lapse. The provision of lower dividend tax paid by Indian companies on dividend received from foreign companies will also lapse on March 31, 2014.
Executive director (taxation) of PWC India Kuldeep Kumar said that the benefit under section 80EE was very helpful to those who were buying their first house. He said that if the interest payable during a year is less than Rs 1 lakh, the unclaimed amount will be allowed to be claimed in the next financial year. The benefit was also allowed during the construction period.