By Dr Sanjay Chaturvedi, LLB, PhD
Home loan borrower have exemption limit of Rs1,50,000/- per year to be deducted from their income if they repay home loan on their first home. This exemption was introduced 20 year back and having revised year on year but never given a serious thought. Budget after budget every government ignored the rational behind Rs1,50,000/- and interest thereon with maximum Rs2,00,000 per annum.
Assuming a normal home cost Rs one crore in any urban center and home loan to value is 85%, hence 85 lakhs is availed. An EMI of 85000/- per month is what a home borrower pay. It comes to approximately Rs10 lakhs per annum average a home borrower pay against a small exemption of Rs1,50,000/- .
The exemption limit must be enhanced to RS10 Lakh if not more to give some breathing space to home buyers. Jajia of taxation on ome buying is imposed by state governments and centre government. Every government, local self governments impose heavy tax on home buying. GST to start with is whoopingly high at 12%. Affordable housing too cannot afford to pay even 5% of the capital expenditure on home. When a loan to value margin is 15 % on home buyer, how can he pay 22% taxes? Stamp Duty is 7% in all most all states, GST is 12% Local Body Taxes are imposed and then surcharges comes to 22%.
This union budget must give a releif from taxation on home buying. Tax exemptions must be increased to 10 lakhs.
