For the middle class and salaried individuals, the new income tax slabs introduced in Budget 2023 have proved to be more beneficial in terms of taxation. PMAY outlay increased by 66% 79,000 crore in Finance Minister Nirmala Sitharaman’s budget speech, which is supposed to give a boost to the real estate sector in terms of affordable housing. However, at the same time, the new tax regime comes without any benefits that taxpayers can avail under any of the sections including section 80C.
The Finance Minister proposed changes in the tax structure by reducing the number of slabs to five and increasing the tax exemption limit in the new regime. 3 lakh, as well as reduced the surcharge rate from 37% to 25% on the highest tax rate in the nation of 42.74%. FM also proposed to increase the tax exemption limit from 7 lakhs 5 lakh under the new tax regime. However, income tax cut for homebuyers 1.50 lakh on repayment of housing loan (principal + interest) under section 80C is available under the old tax regime and switching to the new tax regime will break the benefit of 80C for them, amid the fact that there will be no relief from the higher house Loan rates amid skyrocketing inflation and rising EMIs.
Archit Gupta, Founder & CEO, Clear, said, “The new tax regime is not going to benefit home buyers from a tax saving perspective, as no benefit has been given under section 24(b), which provides interest to home buyers. Allows deduction of up to . home loan repayments from their total income 2,00,000. Also no deduction is allowed under section 80C which enables taxpayers to deduct principal repayment of home loan. Further section 80EEA is also not available which allows additional deduction 1,50,000 in respect of home loan interest subject to fulfillment of certain conditions.”
Dhaval Ajmera – Director, Ajmera Realty Infra India Ltd. said, “The new tax regime will help many home buyers who are seeking a good amount of liquidity. Additionally, its affordable housing segment and flats under Rs. There is going to be a significant impact on the price segment. Also, with this liquidity coming in, it will only help or boost the demand that is currently being witnessed across the country. These days, people are looking for real estate to park their investments. Estates are being considered as an alternative asset class. Hence, such tax benefits or liquidity flows will fuel the current growth in demand.”
Gopal Bohra, partner, NA Shah Associates, said, “There is no benefit to the homebuyer who is opting for the new tax regime, as loss of interest on self-occupied house property will be allowed under this scheme against any other income.” is not set off against and similarly no benefit of repayment of housing loan is available as deduction under section 80C.”
S Vasudevan, Executive Partner Lakshmikumaran & Sreedharan Attorneys said, “The new tax regime is in no way beneficial to home buyers as compared to the old tax regime. Sections 80C and 80EE/ *80EEA* are only available under the old regime. Also, deduction under section 24(b) for interest paid on loan taken for self-occupied property can be claimed only under the old regime. Since these deductions are not available under the new regime, homebuyers may decide to continue under the old system to avail these benefits.”
Nilabh Sanyal, COO, Kuvera said, “The new tax regime has been simplified and leaves more disposable income in the hands of taxpayers. However, targeted deductions for home purchases are not available in the new regime. Demand for housing is likely to fall, making homes cheaper. So the new tax regime does not offer any deductions that encourage home buying, indirectly helping relatively inelastic consumption demand.”
CA Vitesh Vaykar, Senior Tax Consultant, Fintoo, said, “While the government has tried to make the new tax regime very attractive to salaried individuals by raising the limit of non-taxable income, but apart from this, if the same person wants to claim the new Any deduction of interest and principal paid for home loans under the tax regime, unfortunately, will not be possible as the new tax regime does not yet offer any deduction or exemption for home loans.”
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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