With the central government budget to be unveiled on the 31st of January 2020, taxpayers are hoping for an announcement of increased concessions on the housing finance front. The budget of 2019-20 had proposed to hike the tax deductions from Rs. 1.5 lakh to 3.5 lakhs annually for houses costing up to Rs. 45 lakhs. This scheme was proposed to realize the government’s objective of affordable housing for all.

Tax Benefits on Housing Loans for 2019-20

The government of India encourages its citizens to buy a house instead of renting one, which is why it makes provisions for relief in income tax, especially if individuals avail of a housing loan. These tax benefits are applicable through 4 sections, namely, Section 80 EEA, 80EE, 24 and 80C. Let us look at the current deductions taxpayers can avail if they take a home loan.  

Section Tax Deduction Component Maximum Deduction
80 EEA Applicable on home loan interest amount only Up to Rs. 1,50,000 (over and above Section 24, 80 EE & 80C)

Eligibility Criteria for Section 80EEA

  • Applicable to first time home buyers who purchase a home under the Affordable Housing Scheme
  • An applicant cannot already have another owned property on the date of loan sanction
  • An applicant cannot be the owner of a company, partnership firm, HUF, AOP, etc.
  • An applicant cannot purchase a house for over Rs. 45,00,000 all-inclusive
Section Tax Deduction Component Maximum Deduction
80 EE Applicable on home loan additional interest amount only Up to Rs. 50,000 (over & above Section 24, 80C, 80EE)

Eligibility Criteria for Section 80EE

  • An Applicant has to be a first-time home buyer
  • An applicant does not need to reside in the same property
  • An applicant cannot be the owner of a company, partnership firm, HUF, AOP, etc.
Section Tax Deduction Component Maximum Deduction
24 Applicable on home loan interest amount only Up to Rs. 2,00,000 (over and above Section 80C)

Eligibility Criteria for Section 24

  • Applicable to all citizens that own one or more than one property  
  • An applicant does not need to reside in the same property
Section Tax Deduction Component Maximum Deduction
80C Applicable on principal amount including registration fee and stamp duty Up to Rs. 1,50,000 (fully taxable if already invested in other 80C tools

Additional Read:- How will Budget 2020 Affect the Real Estate Sector?

Eligibility Criteria for Section 80C

  • Applicable to all citizens that own one or more than one property 
  • An applicant does not need to reside in the same property
  • An applicant can only avail a deduction of Rs. 30,000 if the property has been under construction for over 5 years

Expected Tax benefits on Housing Loans for 2020-21

The aforementioned sections for home loan tax benefits are already in place in 2020 and are most likely to continue going forward this year. However, the Modi Government is expected to relax the eligibility criteria for available tax rebates under Section 80 EEA. The exact pointers on the revision of the eligibility criteria will be known soon.

It is also being predicted that the property purchase limit will be hiked in metro cities only, from the current value of Rs. 45 lakhs to Rs. 65 lakhs, to avail of 80EEA. The predicted relaxation will especially help people that belong to the middle-income groups.

The predictions also insist on increasing the deadline for availing the tax rebate under section 80EEA only. Presently, those who have taken or will be taking a loan in the financial year of 2019-2020 are eligible for tax rebate under this section. The deadline is being reconsidered from 31st March 2020 to 31st March 2022.

Additional Read: Guide For Claiming Tax Benefits on Home Loan

Final Thoughts

Investing in buying a home is better than renting one. This is why the government also offers several tax benefits on housing finance. Buy your dream home by taking a home loan with Tata Capital. We provide competitive home loan interest rates that allow you to avail of the home loan tax benefits on your income. Log on to our website and check your home loan eligibility with the help of our home loan calculator. Our EMI calculator for home loan saves you time and is reliable. Simply, input the loan amount, rate of interest and loan tenure in the home loan EMI calculator to find out your payable interest amount. 

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