If you are a first time home buyer and planning to buy your first house should rush and complete the formalities by March 31 to avail of the additional tax benefit against the interest paid on a home loan. That’s because an exemption available to taxpayers will lapse in the current financial year which enables them to reduce the interest paid from the taxable income. The reduction can be up to Rs 2.0 lakh under section 24 of the Income Tax Act and up to Rs 1 lakh under section 80EE against the interest paid on home loan.
The benefit under section 80EE can be availed only to buy the first house of a value of Rs 40 lakh, provided the maximum loan amount is Rs 25 lakh. The second provision is due to lapse. But those who have already borrowed need not worry. The provision was introduced in the 2013-14 budget, although the benefit was available only for a year to provide a much-needed impetus to housing, which has been hit by rising interest rates and falling real income levels.