There is reason to cheer for potential first-time home buyers as finance minister P. Chidambaram has proposed an additional interest deduction for home loans.
According to the proposal, when a first-time buyer takes a loan of up to Rs. 25 lakh in the coming financial year, he/she “will be entitled to an additional deduction of interest up to Rs. 1 lakh.”
Till date, to anyone availing of a home loan of any amount, the maximum exemption limit for interest repayment has been Rs. 1.5 lakh; with the new proposal, the limit has been pushed up by another lakh.
Twenty-two-year-old Shanmuga Priya, to be engaged shortly, said she planned to buy a house. “I may be able to save a few thousands every month if I buy a house by the end of this year. For people like us, every penny counts,” she said. However, the proposal has drawn mixed response from realtors and builders.
C. Sridhar Varadaraj, vice president of Hanu Reddy Realty, said, “Such a measure does not accrue direct benefit; it may have an indirect and negligible impact. But I’m not sure it will spur people to buy property immediately.” However, T. Chitti Babu of Akshaya Homes said the interest deduction move may persuade builders to take on affordable housing projects to meet the demand.
Experts said they expected subsidy in service tax, decrease in stamp duty and registration charges. The lack of such sops made the budget a disappointing exercise, they said.
