If you have taxable income of over Rs 10 lakh and live in your parental house, there is good news for you. India’s first woman Finance Minister Nirmala Sitharam in her Union Budget 2019-20 has provided a reason for you to buy a house and an environment-friendly car.
This is because, in her first Budget, Sitharam has announced up to Rs 5 lakh deductions from taxable income on interests paid on loans taken for purchase of an electric vehicle and an affordable house of value up to Rs 45 lakh.
So, a taxpayer under 30 per cent tax bracket may save up to Rs 1.5 lakh, while a person in the 20 per cent tax bracket may save his/her entire tax of up to Rs 1,12,500, as tax rebate of up to Rs 12,500 on taxable income up to Rs 5 lakh was announced in the Iterim Budget 2019.
The deduction on interest paid on auto loan taken for buying an electric vehicle will be Rs 1.5 lakh under the proposed section 80EEB, provided that the loan has been sanctioned during the period beginning on the April 1, 2019 to March 31, 2023. To avail the benefit, the assessee shouldn’t have another electric vehicle on the date the loan was sanctioned and the loan should have been taken from a financial institution, including an NBFC.
Similarly, additional deduction on home loan interest paid up to Rs 1.5 lakh may be claimed under the proposed section 80EEA, along with the provision of existing deduction limit of Rs 2 lakh u/s 24 of the Income Tax Act, for buying an affordable house of value up to Rs 45 lakh, provided that the assessee doesn’t own any residential house property on the date of sanction of loan and the loan has been sanctioned by a financial institution during the period beginning the April 1, 2019 to March 31, 2020.
However, to avail the tax benefit on home loan interest, while purchasing the affordable house, you must be careful that the carpet area of the residential unit does not exceed 60 square meter in metropolitan cities of Bengaluru, Chennai, Delhi NCR (i.e. Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon and Faridabad), Mumbai (whole of Mumbai Metropolitan Region), Hyderabad and Kolkata or 90 square meter in other cities or towns.
So, there is an incentive now to acquire movable (electric car) and immovable (affordable house) assets and save a considerable amount of tax, provided you fulfill the above-mentioned criteria.