Budget 2022 India: Government may increase the annual tax deduction limit for repayment of home loan principal under Section 80C of the Income Tax act.
New Delhi: FM Nirmala Sitharaman is likely to propose higher tax deductions on home loans in Budget 2022. According to the latest report by Mint, step is being taken to boost the home demand in the country. The government may increase the annual tax deduction limit for repayment of home loan principal under Section 80C of the Income Tax act. The current cap of Rs 1.5 lakh may be raised to Rs 2 lakh, the report said.
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The move will come as relaxation to taxpayers and boost housing demand. The report also quoted an expert saying that the deduction limit has not been raised since 2014 and there is a significant demand for the same.
Under 80C, taxpayers are allowed to invest in various government schemes like Public Provident Fund to claim tax deductions. The surge in expenses due to the pandemic has led to the exhaustion of household savings. Also, the rising inflation has been a constant cause of worry.
Earlier, according to the report, FM Nirmala Sitharaman announced new tax rules but they were not accepted by most taxpayers.
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The tax deductions can be increased by introducing a separate clause. Like an additional benefit of Rs 50,000 contribution towards National Pension Scheme under Section 80CCD.
The report also said that the real estate sector is expected to get another incentive. It may be given in the form of an additional interest deduction of ₹1.5 lakh on affordable home loans by another year until March 2023. In 2021, real estate in India saw a revival of sales. The sales for residential property rose over 90 per cent of the pre-pandemic level.
