The finance invoice was offered by parliament on February 29, 2016. After receiving the president’s consent, it became law on May 14, 2016. This Finance Act 2016 has certain provisions for you to gain individual taxpayers, vis-à-vis home mortgage interest and rent paid. Extension of time for completion of construction till now, a taxpayer who borrowed cash for an underneath-creation property for his residence became eligible to claim Rs two lakhs, starting from the year wherein production changed into finished and ownership taken. But, to claim this tax advantage on Hobby usa24(b), construction of the residence was required to be completed within three years from the end of the monetary 12 months wherein the money turned into borrowed, failing which, the entitlement for interest for reserving below-production assets used for self-career changed into decreased to Rs 30,000. Owing to rampant delays in construction and handing over possession by developers, many taxpayers could not think of the overall blessings.
To me over the three yearstigate such worry to taxpayers, the completion of creation has been prolonged to five years from three years. An additional benefit for interest on the home mortgage taken by a first-time home buyer below section 80EE, a man or woman who borrows cash for purchasing a house, gets a further deduction of Rs 50,000 from his income if certain conditions are satisfied. The first situation for claiming this gain is that the individual taxpayer cannot own any house on the date the home loan is sanctioned. Secondly, the quantity of home loans has to be known not to exceed Rs 35 lakhs for a house that does not value more than Rs 50 lakhs. Moreover, the loan has to be sanctioned between April 1, 2016, and March 31, 2017. This additional deduction of Rs 50,000 is to be had in admire of the below-creation assets, even at some stage in its creation length, because the supply does no longer require that the development of the residence for which the mortgage is taken must be finished, in contrast to segment 24(b) wherein you could begin claiming the hobby deduction, handiest from the 12 months in which the development is completed.
This can be useful for people who are shopping for a property for self-use. The most allowable hobby is restrained to Rs lakhs, including the pre-EMI interest you could claim in 5 equal annual installments beginning from the year crowning glory of creation. More advantageous tax advantages for rent paid segment 80GG affords tax comfort to folks who are salaried and are not in receipt of any residence lease allowance (HRA) from their employers or are self-hired, concerning the hire paid for any lodging occupied by way of them. The deduction is authorized simplest if the taxpayer, spouse, or minor baby does not own any residential accommodation within the vicinity wherein he broadly speaks is living. Furthermore, the taxpayer must not own a residential house in every other area that is self-occupied for tax functions. The deduction amount is the excess of lease paid over 10% of overall profits, which is25% of the total profits. In advance, the deduction was changed to Rs 2,000 in step with the month. This low restriction didn’t provide any essential advantage for the taxpayers, who had been paying huge rent quantities. The Finance Act 2016 has raised the ceiling from Rs 2,000 in keeping with the month to Rs 5,000.
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