The budget session of Parliament has started 2025 and Finance Minister Nirmala Sitharaman will present the Union Budget on 1 February. This time the middle class has high expectations from this budget, especially those who are planning to buy houses. According to reports, the tax exemption on home loans can be announced, which will make the house even more economical.
Demand to increase deduction on home loan intensifies
There has been a huge jump in real estate prices in the last few years, but there has been no change in the tax exemption on the interest and principal of the home loan. This is the reason why there is a continuous demand to increase deduction on home loans.
Currently there is two types of tax exemption on home loans:
- Section 24B – Rebate on home loan interest
- Section 80C – Rebate on Principal of Home Loan
It is now expected that the government can increase the limit of both these deductions, which will give further relief to home buyers.
Chances of increasing tax deduction under section 24B
Currently, under section 24B of the Income Tax Act, a deduction of up to Rs 2 lakh can be claimed on home loan interest. There is talk of increasing this limit to Rs 4 lakh.
Benefit:
- If the government increases this deduction, then the tax burden on home loan EMI will be reduced.
- This will make it even easier to buy a house.
- People will get more opportunities to invest in real estate.
Experts at Axis Securities believe that this step will also help the real estate sector grow faster.
Changes can also occur under section 80C
Currently, a deduction of up to Rs 1.5 lakh is available on the principal of home loan under section 80C. However, this section also includes many other investment options (PPF, EPF, LIC premium, ELSS etc.), so that the deduction of the home loan is not fully used.
What can change?
- The government can create a new category for deduction of up to Rs 1.5 lakh separately on the principal amount of home loan.
- This will give more tax exemption to those taking home loans.
- The real estate sector will be boosted and the number of buying houses will increase.
There may be change in the definition of affordable housing
The real estate industry has long demanded that the definition of Effordable Housing be changed. The government can increase the price limit of houses in metro cities from Rs 35 lakh to Rs 50 lakh under the Pradhan Mantri Awas Yojana (PMAY).
What will happen with this?
- More houses will come under the purview of Epordable Housing.
- More people will benefit from the government’s subsidy and tax benefits.
- It will be easy for middle class people to buy a house in big cities.
Real estate sector will get strength
The growth of the real estate sector will also have a positive impact on the country’s economy.
Which sectors will be benefited by the firmness of the real estate sector?
- The demand for steel, cement, paint and lighting industry will increase.
- There will be opportunities to give new loans to the banking and finance sector.
- New employment opportunities will be created, which will benefit many people.
