New Delhi: PM Narendra Modi has made up his mind to share the note ban bonanza with you. The Modi government will soon announce various income tax sops soon. One of the sops being considered is hike in tax incentives on home loans. It’s a twin purpose sop- to give you tax benefit and give fillip to the note ban-hit realty sector.
The plan is to increase tax benefit on payment of home loan from the current Rs 2.5 lakh to Rs 3 lakh. The move is expected to make middle class happy, and increase job opportunities in the labour intensive construction sector. It will also benefit, cement, steel and realty sectors. The announcement is likely to be made in Budget.
This move comes after the government ‘pressurised’ banks to cut interest rates on home loans after huge cash inflow following note ban. The note ban deposits have given government the space to loosen its purse strings.
Current tax break on home loan:
- Rs 1.5 lakh deduction on repayment of principal
- Interest payment of up to Rs 2 lakh allowed for self occupied property, this reduces tax liability
- For these benefits, house construction should be complete within three years