Finance Act, 2016 has introduced education of interest payable on housing loan for first time home buyers taken from any financial institution over and above the deduction allowed under section 24B. Section 80EE has been amended for this purpose.

The deduction is allowed only to individuals, the maximum limit of deduction is Rs. 50,000 and deduction are available from the financial year 2016-17 onwards. Such deduction is allowed till such loan is recovered.

There is no limit on interest deduction under section 24b for rented properties, therefore this section benefits only the persons who have taken the loan on self-occupied properties.

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Deduction under this section is allowed only if following conditions are satisfied –

(i) the loan has been sanctioned by the financial institution between 1st April 2016 to 31st March 2017.

(ii) the amount of loan sanctioned for acquisition of the residential house property does not exceed Rs. 35 lakhs.

(iii) the value of residential house property does not exceed Rs. 50 lakhs.

(iv) the assessee does not own any residential house property on the date of sanction of loan.

The deduction is allowed over and above deduction under section 24b. Assessee can not take the deduction under both the sections.

On July 03, 2016 by www.taxexcel.net

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Finance Minister Arun Jaitley had announced incremental tax benefits for common taxpayers in his recent Budget 2016

Here are some income tax changes that experts expect in the budget:

1) The basic income tax exemption limit should be raised from Rs. 2.5 lakh for male & female below 60 years age.

2) The current deduction limit of Rs. 2 lakh on home loan interest paid U/s 24B during a financial year is too & Additional Section 80EE where can get more Home Loan Interest Max Rs. 1.5 Lakh excluding U/s 24B.

3) A separate section for deduction on the principal paid on home loan should be introduced. Home loan principal repayment deduction is currently clubbed with other options under Section 80C, which has a ceiling of Rs. 1.50 lakh.

4) Home buyers can currently avail home loan interest deduction only after the completion of construction of property. In case construction is not complete within 3 years, the deduction is reduced to Rs. 30,000 per year from Rs. 2 lakh under current norms. This needs to be changed, given widespread construction delays.

5) The limit of Section 80C of Rs. 1.5 lakh which raised and linked to the Additional exemption U/s 80CCD(1B) Max. Rs. 50,000/- income-level of tax payers as some of the compulsory contributions like employee provident fund leave very little scope for other investments for people falling in highest tax bracket up to Rs. 2 Lakh.

6) Medical Insurance U/s 80D has raised the Max. limit of Rs. 25,000 per annum & Rs. 30,000/- for Sr.Citizen

7) The travel allowance, which is raised to Rs. 1,600 per month from Rs. 800 & Rs. 3200/- P.M. for above 80% Phy.disable persons.

8) The New Pension Scheme (NPS) should be made tax-exempt on withdrawal on the lines of other investments like PPF, insurance policies etc.

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On March 21, 2016 by www.taxexcel.net

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