Budget 2016: Housing sops for the poor

By Hiral Thanawala

This budget has introduced two new initiatives for the poor home buyers. First, additional deduction of Rs 50,000 is allowed u/s 24 (D) for first time home buyers. Currently, the maximum deduction allowed on 'self-occupied house’ is Rs 2 lakh under the head ' Income from House Property'. To qualify for this additional Rs 50,000 deduction, the value of house should not exceed Rs 50 lakh and loan amount should not exceed Rs 35 lakh. However, getting a home in metro city at a price of Rs 50 lakh is a challenge. Anuj Puri, Chairman and Country Head, JLL India is of the opinion, “Most first-time home buyers in the major metros will be left out of the additional Rs 50,000 tax exemption announced in the budget. It will mostly benefit first-time home buyers in tier-II and tier-III cities.”

Second, the benefits under section 80GG enhanced for people who are staying on rent and at the same time don’t get house rent allowance (HRA). FM has proposed to increase the limit of deduction of rent paid u/s 80 GG from Rs 24,000 p. a. to Rs 60,000 p.a. For computing the deduction u/s 80GG, least of the three will be considered while filing for income tax.

1. Rs 5,000 per month (i.e. Rs 60,000 p.a.) 2. Actual rent paid less 10% of the total income 3. 25% of the total income earned