According to a demand put across by a national flat buyers association, the government must do away with the five-year bar for gaining from income tax benefits for house buyers because late deliveries and postponements by developers has made the relief more of a distant dream.
According to the current laws, a home buyer is entitled to benefits of a maximum Rs 2 lakh on the interest he pays even if the construction of the house will be completed five years after the end of the finance year in which the loan for the house was taken.
Under present rules, a home buyer can avail tax deduction up to Rs 2 lakh on interest paid even if the house is ready in five years from the end of the finance year in which the home loan was taken. The buyer is only able to avail the tax benefit when he takes over possession of the house.
A letter from ‘Fight for RERA’ to the Finance Minister, Arun Jaitley says, “The limitation clause is punishing the home buyers for no fault of their as delay in getting possession is due to fault of builders”.
Another suggestion contained in the letter was that in cases where the allottee is making payment for the EMI as well as rent and the builder as defaulted on the possession date for, there should be a rule in which EMI paid is deducted from total income of such allottee over any other deduction that he is availing at that time.