Monday, 7 March 2016


If your builder doesn’t give you possession of that dream house within the promised three years. For, the 2016-17 Budget proposes tax relief on interest payment on home loan if he property bought, or under construction, is completed within 5 years from the end of the financial year in which he loan was availed instead f the current 3 years.

The relief, under Section 4 of I-T Act, could help save ax up to Rs 60,000 per annum.In a further boost to the affordable segment, FM Arun Jaitey also proposed to allow eduction for additional inerest of Rs 50,000 per annum or loans up to Rs 35 lakh sanctioned during the next financial year for first-time home-buyers, provided the value of the house doesn’t exeed Rs 50 lakh.

Assuming a loan of Rs 35 akh to be paid over 20 years, he annual deduction comes around Rs 2.5 lakh, includng the Rs 2 lakh currently available. At 9%, the interest utgo in the first year would e Rs 3.12 lakh. So, the buyer will save Rs 75,000 if he is in 30% tax-bracket, bringing own the effective interest rate in the first year to 6.8%. For the first seven years, he interest outgo will remain bove Rs 2.5 lakh and, so, the buyer will continue to get an annual tax benefit of Rs 75,000.

For employees who don’t get HRA benefits, the FM raised the deduction against house rent from Rs 2,000 per month to Rs 5,000. This would result in tax savings in the range of Rs 3,708 to Rs 12,204, depending on the income slab.


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