In FY23, no additional tax relief of Rs 1.5 lakh for home loans for buyers of affordable homes

In the 2022-23 Union budget, the government announced its decision to remove this tax relief. Under Section 80EEA, a person was entitled to claim an additional deduction of Rs 1.5 lakh in addition to the deduction of Rs 2 lakh available under Section 24 of the Income Tax Act , on interest paid on a home loan under the affordable housing segment.

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So, if we put together all the tax relief on a home loan including principal amount and interest, the total benefit of a home loan comes to Rs 5 lakh.

That was the break: an available deduction of up to Rs 1.5 lakh on repayment of principal under Section 80C; up to Rs 2 lakh on interest payment under Section 24(B), and an additional tax deduction of up to Rs 1.5 lakh (which has been removed) for first-time home buyers on the component interest on the home loan under Section 80EEA.

This deduction under 80 EEA was in addition to the tax deduction available under Section 24(B).

As per Section 80C of the Income Tax Act, you can claim a deduction of up to Rs 1.5 lakh on the amount paid as the principal repayment of the home loan. You can also list the expenses incurred for payment of stamp duty and registration fee for availing the benefits of Section 80C, which has a deduction limit of up to Rs 1.5 lakh.

As per Section 24(B) of the IT Act, you can claim a tax deduction of up to Rs 2 lakh on the interest paid on the home loan. This deduction is applicable in the case of independent or vacant dwellings.

Section 80EEA was introduced in the 2019 Union Budget to give a boost to the affordable housing segment. Under this provision, first-time home buyers were allowed to claim a tax deduction of up to Rs 1.5 lakh on interest paid on affordable housing loans.

During its first term which began in 2014, the NDA government launched its flagship program “Home for All by 2022”. With the same objective, he also announced the launch of the PMAY program to encourage the purchase of housing thanks to the subsidies offered by the Centre.