Finance Minister Nirmala Sitharaman has raised the tax deduction limit to Rs 3.5 lakh on interest paid on housing loan sanctioned during this fiscal for purchase of first home worth up to Rs 45 lakh, a move aimed at boosting the affordable housing segment. Besides, the government will initiate reform measures to promote rental accommodations and will finalise and circulate a model tenancy law to states.
To align definition of affordable housing under the Income Tax Act with GST Acts, it is proposed to increase the limit of carpet area from 30 square metre to 60 square metre in metropolitan regions and from 60 square metre to 90 square metre in non-metropolitan areas. The cost of the affordable house has been fixed at Rs 45 lakh and below. The finance minister said the interest paid on housing loans is currently allowed as a deduction to the extent of Rs 2 lakh.
