Published On: Sat, Feb 1st, 2020

Tax deduction on affordable housing loans extended by one year

New Delhi: In a bid to increase demand in the realty market, Union Finance Minister Nirmala Sitharaman on Saturday announced a proposal to extend additional deductions of up to Rs 1.5 lakh for the interest paid on loans for purchase of affordable houses, up to March 2021.

She also announced concession to real estate transactions

The deductions so far were allowed on housing loans sanctioned on or before March 31, 2020.

“For realisation of the goal of ‘housing for all’ and affordable housing, in the last budget I had announced an additional deduction of up to Rs 1.50 lakh for interest paid on loans taken for the purchase of an affordable house. In order to ensure that more persons avail of this benefit and to further incentivise the affordable housing, I propose to extend the date of loan sanction for availing this additional deduction by one more year,” Sitharaman said.

Further, in order to boost the supply of affordable houses in the country, the Budget proposed a tax holiday on profits earned by developers of affordable housing projects approved by March 31, 2020.

She also announced concession to real estate transactions.

Currently, while taxing income from capital gains, business profits and other sources in respect of transactions in real estate, if the consideration value is less than the circle rate by more than 5 per cent, the difference is counted as income both in the hands of the purchaser and seller.

“In order to minimise hardships in real estate transactions and provide relief to the sector, I propose to increase the limit of 5 per cent to 10 per cent,” the Minister said.

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