Union Finance Minister, Nirmala Sitharaman did her best to restore the confidence of the Indian real estate as the market witnessed a massive setback due to the liquidity issue last year. While emphasizing on the PMAY Scheme, Sitharaman announced an extension on affordable housing interest deduction by one year. This decision has certainly come as a relief to the homebuyers under Section 80EEA.
Current Benefits offered under Tax Deduction for Affordable Housing Projects:
Presently, the buyers who have availed home loan until 30th March 2020 are eligible to take up the additional deduction on home loan interest that values at Rs. 1.5 lakhs. This affordable housing deduction under income tax is offered on a dwelling unit with a carpet area of 90 sq. meter in tier-II cities and 60 sq. meter in metro cities. However, the residential unit should not more be more than or equal to Rs. 45 lakhs.
Under the PMAY Scheme, the Union Government formulated a Credit Linked Subsidy scheme [CLSS] to offer subsidy on different types of house properties to the home buyers falling under the Low-Income Group, Economically Weaker Section and the Middle-Income Group.
The prospects belonging to the EWS section with a yearly income of Rs. 3 Lacs can apply for a residential unit under this scheme. Similarly, the homebuyers having an annual income between Rs. 3 lakh and Rs. 6 Lakhs can apply under the Low-Income group. Those earning between Rs. 6 Lakhs to Rs. 12 Lakhs annually can also apply for a residential unit under the Middle-Income group.
Under the current provision, the homebuyers under LIG, EWS, MIG 1 and MIG 2 can avail a subsidy of Rs. 2.67 lakh, Rs. 2.35 lakh and Rs. 2.30 lakh respectively.
What Homebuyers will get from new Tax Deduction for Affordable Housing Projects:
The Union Finance Minister gave a one-year extension on the interest on housing loan deduction for FY 2020-21. This announcement is made to attract maximum buyers towards the affordable housing segment so that the target of Housing for All can be achieved by March 2022 that is also the set deadline for the completion of the PMAY scheme.
Apart from these, the homebuyers can get various advantages under the affordable housing deduction under income tax.