Tax break for 45 lakh homes

“The economy is slowing down and consumption is at a 20-quarter low coupled with a liquidity crisis,” said Chawla.
Apart from this new proposed deduction, the interest paid on housing loans was already allowed as a deduction to the extent of <span class='webrupee'>₹</span>2 lakh but for ‘self-occupied property’. Will the interest component go up to <span class='webrupee'>₹</span>3.5 lakh?(PTI File Photo)
Apart from this new proposed deduction, the interest paid on housing loans was already allowed as a deduction to the extent of 2 lakh but for ‘self-occupied property’. Will the interest component go up to 3.5 lakh?(PTI File Photo)
Updated on May 28, 2020 10:45 PM IST
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Hindustan Times, Mumbai | By

If you purchase a house of value up to 45 lakh on loan by 31 March 2020, you will get an additional deduction of 1.5 lakh for interest paid on loans. Therefore, a person purchasing an affordable house will now get an enhanced interest deduction up to 3.5 lakh, according to the finance minister’s speech.

The move is to improve real estate demand.

“The economy is slowing down and consumption is at a 20-quarter low coupled with a liquidity crisis,” said Chawla. Apart from this new proposed deduction, the interest paid on housing loans was already allowed as a deduction to the extent of 2 lakh but for ‘self-occupied property’. Will the interest component go up to 3.5 lakh?

“Let’s say you bought a house for 45 lakh and took a loan of 20 lakh at 9% interest rate. The EMI will be around 20,285 for a 15-year period in which around 15,000 per month—annual interest outgo of 1.8 lakh. However, if you take a 40 lakh loan, your EMI will be around 40,571, 30,000 and interest component adds up to 3.6 lakh in a year. In this case, the annual deduction of 3.5 lakh will come in handy. ” said Sadagopan.

 

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Thursday, May 26, 2022