Budget 2020: For homebuyers, deduction up to Rs 1.5 lakh on loan interest, tax holiday for affordable housing extended

In a big relief for homebuyers, Finance Minister Nirmala Sitharaman today extended the date of loan sanction by a year for homebuyers to avail deduction benefits of up to Rs 1.5 lakh for interest paid on home loans. Earlier the deadline to avail the benefits of deductions was applicable for loans sanctioned on or before 31st March 2020. (#BudgetOnZee)

"For affordable housing, I had announced an additional deduction of up to Rs 1.5 lakh for interest paid on loans taken for purchasing an affordable house. The deduction was allowed on housing loans sanctioned on or before 31st March 2020. In order to ensure that more people avail of this benefit and to further incentivize the affordable housing, I propose to extend the date of loan sanction for availing this loan deduction by one year," the Finance Minister said.

Sitharaman also extended tax holiday for developers involved in developing affordable housing by one year. She said that this move was in furtherance of the Government's move to incentivize affordable housing.

"Further in order to boost the supply of affordable houses in the country a tax holiday is provided on the profits earned bt the developers of affordable housing projects approved by 31st March 2020. In order to promote the affordable houses I propose to extend the date of approval of affordable housing projects, for availing tax holidays by one more year, again," the Finance Minister said during her nearly two-and-half-hour speech.

The date for approval of affordable housing projects eligible for tax holiday now stands till 31 March 2021.

The affordable housing segment is allowed deductions under Section 80IBA of the Income Tax Act.

"Push to affordable housing with one-year extension of income tax exemption on interest up to 3.50 lakh and tax holiday to builders for new launches of affordable housing upto March 21. Simplifying compliances for taxpayers, incentive to boost FDI in infrastructure, etc are great proposals," Deo Shankar Tripathi, MD, and CEO of Aadhar Housing Finance said.

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The Finance Minister Nirmala Sitharaman was presenting her second budget and her first full budget in the Narendra Modi 2.0 government. The Finance minister began her Budget speech by remembering the former finance minister, the late Arun Jaitley.