Budgetary benefits for Individual Home Loan Borrowers Buying a home is the most common investment option in the current scenario. In addition to garnering higher profits, through home loan route, it also empowers individuals with successful tax savings. Thus, banks are not just targeting the individuals who do not have adequate resources, but for generic public who doesn’t need them and are interested in tax saving schemes. And with a slew of measures released in the Union Budget 2014, home loan seekers got a reason to cheer. Recent announcement by the Finance Minister Arun Jaitley during the Budget speech on 10th July 2014 unfolded a hike in deduction of home loan interests under Section 24. The deduction of tax under home loans has been raised from Rs 1.5 lakh to Rs 2 lakh incentivising potential home buyers. Moreover, there has been raise in the limit for tax deduction under Section 80C from Rs. 1 lakh to Rs. 1.5 lakh. Budget Benefits With regard to these incentives, practically putting the figures in comparison with different tax slabs they infer differential benefits for each slab as shown in the table below.
Therefore, working on an example of X with a Gross Annual Income of Rs. 6,00,000 falls into the tax slab with 20 per cent taxation. Taking the case of pre-budget scenario, removing the basic tax exemption of Rs 2 lakh along with the maximum possible tax deduction under Section 80C i.e Rs 1 lakh the Net Taxable income stands out to be Rs 3,00,000. But if X goes for a housing loan, he can exempt about Rs 1.5 lakh under the Section 24 of Housing Loan deduction bringing the Net Taxable Income to Rs 1,50,000. Now working on the post-budget scenario, removing the basic tax exemption of Rs 2.5 lakh along with the maximum possible tax deduction under Section 80C (Rs 1.5 lakh) the Net Taxable Income of X stands out to be Rs 2,00,000. But if X goes for a housing loan, he can possible exempt about Rs 2 lakh under Section 24 of Housing Loans bringing the Net Taxable income to Rs 0.
Clearly there has been a benefit of Rs 10,000 from revision of the housing loan deduction. Similarly, individuals from tax slabs with 10 per cent and 30 per cent tax rate could possibly save Rs 5,000 and Rs 15,000 respectively. Points to Remember before taking a home loan! Selection of the most suitable home loan in the market is one of the important decision for a loan seeker. There are three things governing the home loan industry namely, the Loan eligibility criteria, Repayment interest rates and the Tax benefits. Apart from these, some major home loan components that should be looked upon would be Tenure and Total fees charged by the respective bank. Source: CommonFloor.com For Latest Updates on Real Estate Updates, Property News and Cities Infrastructure Developments Visit: http://www.commonfloor.com/guide
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