#UnionBudget2016: Will Jaitley's Budget Lure First-Time Home Buyers To The Market?

Taking a home loan not only helps a person finance his home purchase but also gives him a host of tax benefits. Various tax exemptions are provided for payments made towards the home loan principal and interest. Section 80C and Section 24 of the Income Tax (I-T) Act are applicable to claim deduction for payments made towards the principal and the interest component of a housing loan, respectively.

In 2013, an additional tax rebate under Section 80EE was introduced for the first-time for home buyers by the then finance minister P Chidambaram. The move was helpful in promoting affordable housing in the country.

Bringing more cheer to the sector, Finance Minister Arun Jaitley has given an additional tax rebate for the first-time home buyers in his Budget for the financial year 2016-17 with an aim to give an impetus to the Centre's 'Housing for All by 2022' mission. This time, first-time home buyers have been given a deduction for additional interest of Rs 50,000 per annum on housing loans. This is subject to the conditions below:

The quantum of loan sanctioned should be less than Rs 35 lakh

The loan should be sanctioned in the financial year 2016-17

The value of house should not exceed Rs 50 lakh

Under Section 80EE, which was applicable for the assessment year 2014-15, the deduction allowed for additional interest was up to Rs 1 lakh. It stated the following:

The loan should have been sanctioned by a financial institution during the period beginning from 1st day of April, 2013, and ending before 31stday of March, 2014.

The total amount of loan sanctioned for the residential house should not exceed Rs 25 lakh.

The value of the residential property should be less than Rs 40 lakh.

The assessee should not have any residential property at the time of sanctioning of the loan.