Home loan borrowers and industry experts have a wishlist for the Union Budget 2025-26. They hope Finance Minister Nirmala Sitharaman will enhance tax benefits to make home ownership more affordable. Key demands include higher deductions under Sections 80C and 24B. The industry body also proposed reducing marginal personal income tax rates for incomes up to Rs 20 lakh to spur consumption and growth.
Home ownership costs are high in urban areas, requiring large loans that strain incomes and limit savings. Currently, homeowners get deductions under Sections 80C and 24B under the old regime. For a self-occupied house, the maximum tax exemption on home loan interest is Rs 2 lakh per year under Section 24(b), and Rs 1.5 lakh on principal repaid under Section 80C. Financial experts suggest creating a separate section for home loan principal repayment with a deduction limit of up to Rs 3 lakh.
The government plans to overhaul the Income Tax Act to simplify tax compliance. This could consolidate home loan payments, including interest and principal, into a single tax section. Net deductions on home loans could increase to Rs 5 lakh, making home ownership more affordable and reducing financial burdens.
