Housing loan exemption limit increased from 1.5 to 2.5 lakhs for first time homebuyers: Budget 2013-14
The Finance Minister announced that a person taking a loan of Rs. 25 lakhs for his first home will get Rs. 1 lakh additional exemption on repayment of interest component; therefore, the exemption limit has now increased from 1.5 to 2.5 lakhs.
Finance Minister P Chidambaram presented one of the highly awaited economic blueprint on Thursday, India's 82nd Union Budget, which is for the year 2013-2014. This was Chidambaram’s eighth Budget and had high expectations as it was the final means of reforms before the general elections due in April-May 2014.
For real state sector and home buyers there were several announcements. The Finance Minister announced that a person taking a loan of Rs.25 lakhs for his first home will get Rs.1 lakh additional exemption. The exemption limit on repayment of interest on home loan has now increased from 1.5 lakhs to 2.5 lakhs. The other highlights for the real estate industry are:
· Measures will be taken to increase investment in infrastructure.
· Infrastructure debt fund to be encouraged.
· Select institutions to be allowed to issue tax free bonds to raise Rs. 50,000 crore to fund infrastructure projects.
· Rs. 6,000 crore to be allocated for rural housing fund in 2013-2014.
· National Housing board to set up Urban Housing Fund with an allocation of Rs. 2,000 crore. Interest Rate subvention scheme will be extended.
· Tax-free infrastructure bonds of Rs.50, 000 crore to be issued.
· TDS at the rate of 1% on the transfer of movable property for amount above Rs. 50 lakhs, with the exception of agricultural land.
· Abatement rates to be reduced on luxury apartments.
But, this exemption is allowed only under the following conditions.
· The increase in exemption limit is only for this year alone.
· This increase in exemption limit does not apply to existing home loan takers. It is only for the loan sanctioned by the financial institutions during 1st April 2013 to 31st March 2014.
· The loan is taken for your first home i.e., you as a taxpayer do not already own a residential property on that date.
· The value of the property does not exceed 40 lakhs.
· The loan amount does not exceed 25 lakh.