First-time house buyers get `1 lakh tax deduction
To increase house sales, finance minister P. Chidambaram on Thursday raised tax deduction limit by `1 lakh for the first time home buyers to promote the housing sector.
“A person taking a loan for his first home from a bank or a housing finance corporation up to `25 lakh during the period April 1, 2013 to March 31, 2014 will be entitled to an additional deduction of interest of up to `1 lakh,” said Mr Chidambaram said in the Budget speech.
The finance minister added that if the limit is not exhausted, the balance may be claimed in 2015-16.
“This deduction will be over and above the deduction of `1.5 lakh allowed for self-occupied properties under section 24 of the Income-tax act,” Mr Chidambaram said.
However, the Union finance minister increased service tax on luxury homes and flats.
“Homes and flats with a carpet area of 2,000 square feet or more or of a value of `1 crore or more are high-end constructions where the component of service is greater. Hence, I propose to reduce the rate of abatement for this class of buildings from 75 per cent to 70 per cent,” said Mr Chidambaram.
The Union finance minister said that existing exemptions from service tax for low cost housing and single residential units will continue.
National Real Estate Development Council (NAREDCO) said that due to this service tax on such homes has gone up from 3 per cent to 3.6 per cent.
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