Categories: Politics

Relief for the Common Man: Home Loan Interest Tax Benefits Likely in Budget 2025

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As Budget 2025 approaches, speculation is rife about potential tax reforms that could bring relief to taxpayers, particularly in the area of home loan deductions. Here’s a detailed breakdown of the developments and expectations:

1. Tax Deductions on Home Loan Interest

Under the old tax regime, taxpayers can claim a deduction of up to ₹2 lakh for home loan interest on self-occupied property. However, this benefit is not available in the new tax regime.

2. Challenges in the New Tax Regime

  • For rental properties, there is no cap on the deduction of home loan interest from taxable rental income under Section 24 of the Income Tax Act.
  • However, when the interest on loans exceeds rental income, property owners often face a loss.
  • In the new regime, this loss cannot be offset against income from other sources or carried forward, creating financial challenges for property owners.

3. ICAI Recommendations

The Institute of Chartered Accountants of India (ICAI) has made the following recommendations to the government:

  • Allow a deduction of up to ₹2 lakh for home loan interest under the new tax regime.
  • Permit the set-off of losses from house property against income from other heads.
  • If no such income exists, allow these losses to be carried forward for up to eight assessment years.

4. Expectations from Budget 2025

Both taxpayers and industry experts are hopeful that Finance Minister Nirmala Sitharaman will address the longstanding demand for better home loan-related tax benefits. Given the rising cost of homeownership in urban areas, experts are urging the government to increase exemptions under Sections 80C and 24B of the old tax regime to make homeownership more affordable.

If the government introduces these reforms, it could provide significant relief for home loan borrowers and incentivize housing investments under the new tax regime.


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