Referring to the rebates on home loan interest and section 80(G), the Ministry of Finance today said that the old tax regime with benefit of deduction on home loan interest and under section 80G already exists as an alternative to the new tax regime, which “tax payers can opt out to avail these benefits under the old tax regime.”
Under the old tax regime, several deduction and exceptions were are allowed. The borrower will no longer be able to claim any of those deduction for the interest on the housing loan under the new tax regime.
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Responding to a query by Indian Union Muslim League (IUML) Rajya Sabha MP advocate Haris Beeran, “whether Government is considering any alternative to support the home buyers and the NGOs,?” the ministry further said that under section 115BAC of the Income-tax Act, 1961 (the Act), individual and HUF had an option to pay income-tax at the lower slab rates subject to certain conditions. The conditions includes that the lower slab rates do not avail specified tax exemptions or deductions. The ministry also noted that the new tax regime was introduced for individual and HUF taxpayers by the Finance Act, 2020.
The MP had also pointed out that rebates on home loan interest and section 80(G) of Income tax was a “resource lifeline for the shoestring budget organizations carrying out exemplary works” in the community and health sectors where Government machineries are not able to reach.
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The ministry further added that the decision was in line with the stated policy of the Government to simplify the provisions of the Act by removing exemptions and incentives while at the same time reducing the rates of taxes.
It is alleged that under new tax regime benefits for home loan are curtailed, though it can be availed. The new regime offers lower rates of taxes but permits limited deductions and exemptions.
