Under Section 80C of the Income Tax Act, the last time the relief was revised was in 2014, and now the request is to increase the total amount by ₹1, 5 lakh
The Union budget, which will be the penultimate budget of the current government before the general elections in 2024, will be presented on February 1. It is also featured days before Assembly elections in five major states.
For the middle class, the main expectation is that there would be eventual income tax relief. Under Section 80C of the Income Tax Act, the last time the relief was reviewed was in 2014, and now the request is to increase the total amount by 1.5 ₹ lakh.
Similarly, interest on housing loans under Section 24 is currently ₹2 lakh maximum, but demand must rise to at least ₹5 lakh as property prices have risen in all major cities and the total loan contracted increased.
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Tax analysts estimate that increasing the ₹2 lakh tax reduction on home loan interest rates, under Section 24 of the Income Tax Act, to at least ₹5 lakh could instantly increase the demand for housing, especially in the affordable and mid-range categories.
“Real estate stakeholders want the ₹2 lakh tax deduction on interest paid on home loans to be increased to ₹5 lakh as this will bring more earners into the tranche and help them achieve their dream of buy a house,” said a tax analyst. .
The move will also maintain demand for sound housing and help property developers recoup their losses and boost their wafer-thin profit margins.
With regard to tax relief and the revision of the tax base, either a reduction in tax rates or a revision of tax brackets is expected. “There are several economies that are under the Section 80C bracket. Beyond that, many middle-class taxpayers are unable to save and therefore face a tax cut on their wages. said the analyst.
“The time has certainly come for a further upward revision of the tax relief, but there is no denying that the government currently lacks the space for such a decision. Instead, it can focus on providing more incentives to struggling MSMEs and SMEs after the pandemic. In addition, government spending on infrastructure could still be boosted,” the analyst said.
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The analyst also said the budget should continue to focus on expansionary policy measures to boost consumer spending and investment.
“Measures to stimulate affordable and middle-income housing in the form of extension and expansion of the tax benefit for first-time buyers, measures for developers engaged in affordable housing and rental housing projects will have a positive domino effect on the real estate sector and the overall economy,” the analyst said.