All sectors of the Union Budget for 2023–24 were balanced, but from the standpoint of taxation, it encouraged individual taxpayers to select the new tax regime by providing a higher tax rebate threshold than the previous one and enabling them to claim higher deductions from various sources of income.
Ankit Aggarwal, MD, Devika Group, stated that compared to the new tax system, the previous tax system gives larger deductions for interest and principal payments on mortgages.
Homebuyers will not be able to claim deductions under the new tax system.
Anurag Goel, Director of Goel Ganga Projects, claimed that changes to the new tax system will prevent homeowners from claiming deductions that they could under the previous tax system.
The Income Tax Act of 1961 contains a number of provisions for a tax break on home loans, including tax deductions for principal repayment of home loans up to Rs. 1.5 lakh under Section 80C, tax deductions for interest payments for a home loan up to Rs. 2 lakh under Section 24, and deductions under Section 80EEA in cases of affordable housing if you are a first-time property buyer. Section 80EEA also permits taxpayers to claim an additional deduction of up to Rs. 1.5 lakh.
Which tax system—new or old—should homebuyers choose?
According to Suren Goyal, Partner at RPS Group, all of these deductions are covered by the previous tax code, hence the new tax code will not benefit homebuyers by reducing the tax burden on their mortgage.
In exchange for a lower tax rate and a simplified tax structure, such as new tax slabs of five, tax exemption limits of three lakh, and tax rebate limits of seven lakh, those who choose the new tax regime will have to give up the possibility of deductions under Sections 80C, 24(b), and 80EEA, according to Siddharth Maurya, Resource Specialist, Fund Management.
Home loan borrowers should be aware that if they are in the higher tax bracket, they can actually save tax by choosing the previous tax regime. FM Sitharaman gave significant relief to all taxpayers in the new regime.
