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National: Additional Rs. 1lakh deduction on home loans

Budget 2013 has given middle-class home buyers a good reason to cheer. As per the announcement made by P. Chidambaram, the Finance Minister, any person who applies for a loan of up to Rs. 25Lakh for first home will get an additional tax deduction on interest of up to Rs. 1Lakh.

 

As stated by the finance minister, this additional tax deduction will promote home buying. He further mentioned, it will also help in growth of various other industries such as cement, steel, brick and other companies which are directly related to realty sector.

 

Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India stated, “This will help boost housing sales in tier-2 and 3 cities and peripheral areas and distant suburbs of metros, but not within the metros, where housing is targeted more towards the mid- and upper-income segments.”

 

Besides the increased tax deduction limit on home loans, in order to improve the housing demand in affordable segments, proposal has been made in the Budget that Urban Housing Fund should be started by the National Housing Bank with an initial allotment of Rs 2,000 Cr. In 2013-14.

 

Favista’s Views: Finance minister’s decision to increase tax deduction limit on home loans can be a good signal for improvement of residential real estate market. It might also be helpful for the economy.

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