Monday, December 26, 2022

Union Budget 2023: Experts recommend extending the HRA tax benefit to house loans

Union Budget 2023: Extend HRA tax benefit to home loans, Experts say

 MUMBAI: House lease recompense (HRA) is the most widely recognized part in compensation slips. Renters can take advantage of HRA-available tax advantages. The Chamber of Tax Consultants (CTC) has stated in its pre-Budget memorandum and discussions with Central Board of Direct Taxes (CBDT) officials that, from an I-T perspective, it might be preferable to remain in rented premises. Both the choices (purchase or lease) ought to be welcomed on a standard according to the duty point of view and regardless, leasing ought not be boosted, charge specialists say.

HRA exemption is limited to the lowest of the three components under section 10 (13A) of the I-T Act and Rule 2A: Rent paid, less ten percent of salary (salary here refers to the basic salary plus the dearness allowance); 50% of salary if the house is in one of the four major cities, or 40% of salary if it is in a different city; actually received HRA.

According to CTC, employees who take out home loans in order to purchase their first home must also be eligible for the HRA exemption. However, it would not be allowed to deduct the same EMI payment twice from different sections. This idea would likewise help lodging projects and boost property buys.

According to tax experts, the scope of the tax benefits that can be applied to home loans is fairly limited.

"A derivation of Rs 1. Section 80C allows for a claim of 5 lakh for the repayment of home loan installments obtained through authorized channels (such as a bank). However, all investments and expenditures that are eligible for deduction under this section, such as contributions to the Employees' Provident Fund (EPF) and Public Provident Fund (PPF), are included in this limit. The Rs 1 is frequently exhausted by salaried workers. 5-lakh cap with the EPF and other investment schemes," says chartered accountant and former CTC president Hinesh R Doshi.

In addition, if the house is sold within five years of purchase, any and all deductions for home loan repayment made prior to the year of sale under Section 80C are reversed.

Experts in taxation suggest reexamining a number of issues. Under the heading "income from house property," the maximum amount of home loan interest that can be deducted is Rs 2 lakh in the case of a self-occupied home. When a house is being built, interest can be paid in five equal installments only after it has been built. The buyer is hit hard if a housing project is delayed for more than five years because the interest deduction is limited to just Rs 30,000.

It should be noted that if a taxpayer chooses the new personal I-T regime, HRA and tax breaks for home loan interest and repayment are not available.

Catch Daily Highlights In Your Email

* indicates required

Post Top Ad