India is currently facing a housing crisis with an estimated 18.78 million people having unmet affordable housing needs. In her recent budget speech, Union Finance Minister Nirmala Sitharaman announced the allocation of three crore additional houses under PMAY- urban 2.0 (Pradhan Mantri Awas Yojana). This is good news for many people hoping to have their own homes. Additionally, the Indian government offers tax breaks and incentives to promote investment in affordable housing for low- and middle-class individuals.
Grihum Housing Finance (Grihum) gives a breakdown of the tax benefits for affordable housing:
Section 80 EEA:
Under affordable housing, additional deductions are provided for home loan borrowers under section 80 EEA. If you buy a property priced below Rs 45 lakhs, you can get an additional deduction on home loan interest payments for up to Rs 1.5 lakhs if the loan is sanctioned between 1st April 2019 and 31st March 2022.
Section 24B:
The benefit under this section is in addition to the tax deduction available under section 80EEA. Section 24B allows home buyers to claim an additional deduction of up to Rs 2 lakhs for the interest paid on a housing loan. The additional benefit was announced in the July 2019 budget.
Section 80C
The principal paid on the home loan EMI for the year is allowed as a deduction under section 80C. The maximum amount that can be claimed under this section is Rs 1.5 lakh
How will this deduction help?
Availing deductions under various sections i.e 80EEA, 24(b) & 80C will help you to claim significant deductions against your taxable income, which can go up to 5 lakhs (1.5 lac +2 lac+ 1.5 lac) depending upon meeting the conditions mentioned under the respective sections. However, you won’t be able to use the entire tax benefit at once, as the interest rate is relatively low.
Is applying for affordable housing loans difficult?
Not at all. Affordable housing has the government’s backing, as seen in schemes like PMAY, which offers interest subsidies on home loans.
First-time borrowers need to have the following documents in place:
- Identity proof: Aadhaar, PAN, Voter ID, or Passport
- Address proof
- Income proof: Bank statements for the last six months. Income tax returns statement, if possible, though it doesn’t come in the way of a home loan
- Property documents: Property title and approved building plan
The next step is identifying a credible lender to assess your repayment capacity and credit score. Lenders like Grihum, with a reputation in affordable housing, offer loans with quick processing and help buyers make informed decisions. With its vast experience in handling affordable housing loans, Grihum is equipped to meet your specific needs and help you choose the best loan option.
Conclusion
India’s real estate market stands at Rs 24 lakh crore, with the affordable housing segment expected to accelerate its growth further. With the Indian government offering significant tax benefits in affordable housing and lenders like Grihum making loan applications easy, home buyers can finally say, “This place is ours.”
