According to the Budget 2024 live updates, there have been significant announcements that will affect your tax liabilities. For the upcoming Budget Session of the Parliament, taxpayers were expecting the deduction on home loan interest payments to be back. Such an announcement would complement the government’s initiative of providing ‘Affordable Housing for All.’
To know more about the provisions announced in the Budget 2024 for home loans, read on.
Highlights of Budget 2024 About Home Loan Interest Deduction
The return of home loan interest deduction in Budget 2024 would have been positive news. However, the Finance Minister did not propose any changes in this respect. That said, the following were the key points announced in Budget 2024 with regards to urban housing:
- An investment of ₹10 lakh crore to address the housing needs of 1 crore urban poor and middle-class families under the PM Awas Yojana Urban 2.0
- The above includes central assistance of ₹2.2 lakh crore in the coming 5 years
- There is a possibility of interest subsidy to offer loans at affordable rates
- Policies and regulations for efficient and transparent rental housing will be put in place
The Start of the Special Relief on Home Loan Interest
In the 2016 Budget, for home loan interest payment deductions, it inserted Section 80EE to the Income Tax Act of 1961. The benefits under this section are over and above the benefits u/s 24. Check out the provisions of 80EE below:
- These deductions are applicable for a home loan sanctioned between April 1, 2016 and March 31, 2017
- The benefit under this section is limited to interest paid up to ₹50,000
- It laid down a condition wherein the loan sanctioned for residential property should not exceed ₹35 lakhs
- This deduction is available with the deduction under Section 24
- You can claim these deductions till you repay the loan in its entirety
Increase in the Special Relief on Home Loan Interest
The government extended the deductions available for homebuyers through the 2019 Budget for home loan interest payments provision. Section 80EEA was inserted for the same. The following are the provisions of this section-
- These deductions are limited to interest paid up to ₹1.5 lakhs in a financial year
- These benefits are only available for first-time buyers of residential property
- These deductions are applicable for loans sanctioned between April 1, 2019 and March 31, 2020
- Subsequently, the Government extended the last date from March 31, 2020 to March 31, 2022 in the Finance Act of 2021
- This section did not lay any limit on the amount of loan sanctioned by the financial institution to be eligible for this benefit
- To be eligible for these deductions, the stamp duty value of such property should not exceed ₹45 lakhs
- You can’t claim tax benefits under this section if you are claiming the benefits of 80EE
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FAQs on Budget 2024 Updates About Deductions on Home Loan Interest
What were the expectations from Budget 2024?
The Union Government has presented its first Budget of this term. As per the 2024 Budget updates, given below were some of the expectations of taxpayers:
- Higher allocation towards the healthcare and education sectors
- Single-window clearance for real estate projects to avoid delays
- Return of deductions on home loan interest payments
- Incentive schemes to promote IT services
- Lower corporate tax rates
- Simplified labour laws to reduce compliance costs of the manufacturing sector
What is the maximum deduction for home loan interest?
You can claim a deduction of up to ₹2 lakhs per financial year on interest payments of housing loans u/s 24. Any additional interest can be claimed as a deduction u/s 80EE or 80EEA, which have a limit of ₹50,000 and ₹1.5 lakhs respectively.
Can we claim both 80EE and 80EEA?
No, you cannot enjoy tax benefits available under Sections 80EE and 80EEA simultaneously.
What is the difference between Sections 24(b) and 80EEA?
Check out the distinguishing provisions of these two sections-
- Section 24(b) allows you to enjoy deductions of up to ₹2 lakhs on interest payments of home loans for self-occupied properties. There is no limit for let-out properties.
- Section 80EEA enables you to claim an additional deduction of up to ₹1.5 lakhs on home loan interest payments, provided you don’t claim a deduction u/s 80EE.
