How new tax regime could affect homebuyers in FY24?

For middle-class and salaried people, the brand new revenue tax slabs launched within the Budget 2023 have proven to be extra advantageous when it comes to taxation. The outlay for PMAY was enhanced by 66% to ₹79,000 crore in Finance Minister Nirmala Sitharaman’s price range speech, which is a lift to the true property sector when it comes to reasonably priced housing. However, on the identical time, the brand new tax regime comes with no advantages that taxpayers can make the most of beneath any Section, together with Section 80C. 

The FM proposed to vary the tax construction within the new regime by lowering the variety of slabs to 5 and elevating the tax exemption restrict to ₹3 lakh, in addition to reducing the surcharge fee from 37% to 25% on the very best tax fee within the nation of 42.74%. The FM additionally proposed to extend the tax rebate restrict to ₹7 lakh from ₹5 lakh beneath the brand new tax regime. However, for homebuyers revenue tax deduction of as much as ₹1.50 lakhs on the reimbursement of housing loans (principal + curiosity) beneath Sec 80C is accessible beneath the outdated tax regime and switching to the brand new tax regime will break off the 80C profit for them, amid the truth that there isn’t any aid from greater dwelling mortgage charges amid skyrocketing inflation and rising EMIs.

Archit Gupta, Founder and CEO, Clear stated “From the attitude of tax financial savings the brand new tax regime is just not going to learn the house consumers, as there isn’t any profit given beneath part 24(b) which permits the house consumers to deduct the curiosity fee of dwelling mortgage from their complete revenue upto ₹2,00,000. Further no deduction beneath part 80C is allowed which allows the taxpayers to deduct principal reimbursement of the house mortgage. Further part 80EEA is just not accessible as properly which permits further deduction of ₹1,50,000 in respect of curiosity of dwelling mortgage topic to fulfilment of sure situations.”

Dhaval Ajmera- Director at Ajmera Realty Infra India Ltd said “The new tax regime will help many homebuyers who are seeking a good amount of liquidity. Additionally, this is going to have a significant impact on the affordable housing segment and the price brackets of flats below 1 crore. At the same time, with this liquidity coming in place, it will only help or boost demand that is currently being witnessed across the country. These days, people are considering real estate as an alternative asset class to park their investments. Hence, tax benefits or liquidity flow of such nature will boost the current increase in demand.”

Gopal Bohra, Partner, N.A. Shah Associates stated “There is no benefit for homebuyer who is opting for new tax regime, under this scheme loss on account of interest on self- occupied house property is not allowed as set off against any other income and similarly no benefit of repayment of housing loan is available as deduction under section 80C.”

S. Vasudevan, Executive Partner Lakshmikumaran and Sridharan Attorneys stated “The new tax regime is not beneficial in any way to homebuyers as compared to the old tax regime. Deductions towards repayment of principal and payment of interest towards housing loans under section 80C and 80EE/ *80EEA* are available only under the old regime. Also, deduction towards interest paid on loans for self-occupied property under section 24(b) can be claimed only under the old regime. As these deductions are not available under the new regime, homebuyers may decide to continue under the old regime to avail these benefits.”

Neelabh Sanyal, COO, Kuvera stated “The new tax regime is designed to be easy and leaves extra disposable revenue within the hand of tax payers. However, the deductions focused in the direction of dwelling purchases usually are not accessible within the new regime. This is more likely to cut back investor demand for actual property, thereby making properties cheaper. So whereas the New Tax regime does not provide any deductions that inspired dwelling shopping for, not directly serving to comparatively inelastic consumption demand.”

CA Vitesh Waikar, Sr. Tax Consultant at Fintoo said “Though the government has tried to make the new tax regime extremely attractive for salaried individuals by increasing the limit of non-taxable income, but apart from it if the same individual is looking to claim any deduction of interest and principal amount paid for a home loan under the new tax regime, then unfortunately, it won’t be possible as the new tax regime does not offer any kind of deductions or exemptions for home loans as of now.”

The views and suggestions made above are these of particular person analysts or broking corporations, and never of Mint.

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