#UnionBudget2016: Will Jaitley's Budget Lure First-Time Home Buyers To The Market?

Taking a home loan not only helps a person finance his home purchase but also gives him a host of tax benefits. Various tax exemptions are provided for payments made towards the home loan principal and interest. Section 80C and Section 24 of the Income Tax (I-T) Act are applicable to claim deduction for payments made towards the principal and the interest component of a housing loan, respectively.

In 2013, an additional tax rebate under Section 80EE was introduced for the first-time for home buyers by the then finance minister P Chidambaram. The move was helpful in promoting affordable housing in the country.

Bringing more cheer to the sector, Finance Minister Arun Jaitley has given an additional tax rebate for the first-time home buyers in his Budget for the financial year 2016-17 with an aim to give an impetus to the Centre's 'Housing for All by 2022' mission. This time, first-time home buyers have been given a deduction for additional interest of Rs 50,000 per annum on housing loans. This is subject to the conditions below:

• The quantum of loan sanctioned should be less than Rs 35 lakh

• The loan should be sanctioned in the financial year 2016-17

• The value of house should not exceed Rs 50 lakh

Under Section 80EE, which was applicable for the assessment year 2014-15, the deduction allowed for additional interest was up to Rs 1 lakh. It stated the following:

• The loan should have been sanctioned by a financial institution during the period beginning from 1^st day of April, 2013, and ending before 31^stday of March, 2014.

• The total amount of loan sanctioned for the residential house should not exceed Rs 25 lakh.

• The value of the residential property should be less than Rs 40 lakh.

• The assessee should not have any residential property at the time of sanctioning of the loan.