The COVID-19 pandemic has dipped the Indian economy to a large extend. Sectors like Tourism, Banking, Real Estate are in danger zone. However, the Government and RBI have come out with various options for homebuyers, in order to boost the Real Estate and Banking Sector like:
- Reduction in CRR and SLR, which has caused to reduce the bank loan interest rate; and
- Extension in the Pradhan Mantri Awas Yojana (PMAY) for MIG-I and II categories peoples.
Now, the Homebuyers have four reasons to buy their dream home:
1. HOME LOAN RELIEF: Without talking too much, let's try to understand with the following examples:
HDFC Bank
|
Interest @ 8.05% |
Current interest @ 6.95% |
|
|
Loan amount |
Rs. 25 Lakhs |
Rs. 25 Lakhs |
|
Duration |
20 Years |
20 Years |
|
Monthly EMI |
Rs. 20,987 |
Rs. 19,308 |
|
Total savings in monthly EMI: Rs. 1,679/- Total savings in EMI (yearly): Rs. 1,679 * 12 = Rs. 20,148/- |
||
State Bank of India
|
Interest @ 7.95% |
Current interest @ 6.95% |
|
|
Loan amount |
Rs. 25 Lakhs |
Rs. 25 Lakhs |
|
Duration |
20 Years |
20 Years |
|
Monthly EMI |
Rs. 20,833 |
Rs. 19,308 |
|
Total saving in monthly EMI: Rs. 1,525/- Total savings in EMI (yearly): Rs. 1,525 * 12 = Rs. 18,300/- |
||
Note: Interest rate has taken out from the respective bank website.
2. PMAY RELIEF: “Housing for All” Mission to provide central assistance in the form of interest subsidy on housing loans for acquisition/ construction of houses for Economically Weaker Section (EWS), Lower Income Group (LIG), and Middle Income Group (MIG). Previously, the last date for MIG Category was 31st March 2020. Now, the Government has extended the scheme for MIG Category up to 31st March 2021. MIG Category is divided into two categories i.e. MIG-I and MIG-II Category.
The key parameters for each category are as follows:
|
Particulars |
EWS |
LIG |
MIG-I |
MIG-II |
|
Family Income |
Rs. 0 to Rs. 3,00,000 |
Rs. 3,00,001 to Rs. 6,00,000 |
Rs. 6,00,001 to Rs. 12,00,000 |
Rs. 12,00,001 to Rs. 18,00,000 |
|
Max Carpet Area (sq. m.) |
30 |
60 |
160 |
200 |
|
Max Subsidy |
Rs. 2.67 lakh |
Rs. 2.67 lakh |
Rs. 2.35 lakh |
Rs. 2.30 lakh |
EXAMPLE: The borrower avails a loan for Rs. 25 Lakhs and the subsidy works out to Rs. 2,35,000. The amount (Rs. 2,35,000) would be reduced upfront from the loan (i.e., the loan would reduce to Rs. 22,65,000) and the borrower would pay EMIs on the reduced amount of Rs. 22,65,000.
However, the following things must be taken in mind before applying for PMAY:
- The beneficiary family should not own a pucca house either in his/her name or in the name of any member of his/her family in any part of India.
- The beneficiary family should not have availed of central assistance under any housing scheme from the Government of India or any benefit under any scheme in PMAY.
- The beneficiary family will comprise of a husband, wife, unmarried sons, and unmarried daughters. However, an adult earning member and a married son or married daughter shall be treated as a separate household.
3. GST RATES: On the GST aspect, let's try to understand the GST rates with the following table:
|
Property Type |
GST rate till March 2019 |
GST rate from April 2019 |
|
Affordable housing* |
8% with ITC |
1% without ITC |
|
Non-affordable housing |
12% with ITC |
5% without ITC |
*Definition of affordable housing: Only those flats with a carpet area of 60 sq. m. in metros cities (i.e. Delhi-NCR, Bengaluru, Chennai, Hyderabad, Mumbai, and Kolkata) and 90 sq. m. in non-metros cities falling under the Rs. 45 lakh cap is affordable housing.
4. INCOME TAX ASPECTS: Interest payable on loans borrowed for the purpose of acquisition or construction of housing property can be claimed as deduction under section 24(b) of the Income Tax Act, 1961. However, the total interest deduction cannot be more than Rs. 2 lakhs.
Interest in pre-construction period: Interest payable on the loan for the period prior to the previous year in which the property has been acquired or constructed (pre-construction period) can be claimed as deduction over a period of 5 years in equal installments commencing from the year of acquisition or completion of construction.
Note: ‘Pre-construction period' is the period prior to the previous year in which property is acquired or construction is completed.
Interest for the year in which construction is completed/ property acquired: Interest relating to the year of completion of construction/ acquisition of property can be fully claimed in that year irrespective of the date of completion/ acquisition.
For Example: Assume interest @ 7%.
|
Conditions |
|||
|
|
Loan sanctioned |
2020-21 |
Loan: Rs. 25 lakhs |
|
|
Completion of construction |
2022-23 |
Interest for FY 2022-23: = Rs. 1,64,206 |
|
|
Pre-construction period |
2 years (2020-21 & 2021-22) |
Total interest: Rs. 1,73,116 (2020-21) + Rs. 1,68,817 (2021-22) = Rs. 3,41,933 |
|
Eligible deduction u/s 24(b) |
|||
|
|
Eligible deduction of interest in FY 2020-21 |
Not eligible |
Nil |
|
|
Eligible deduction of interest in FY 2021-22 |
Not eligible |
Nil |
|
|
Eligible deduction of interest in FY 2022-23 |
One-fifth of interest paid for the pre-construction period + Interest payable in FY 2022-23 (Maximum deduction: Rs. 2 lakhs) |
68,387 [one-fifth of the amount referred in point (c)] + 1,64,206 [total amount refer in point (b)] = Rs. 2,32,593 So, the eligible deduction for FY 2022-23: = Rs. 2,00,000/- |
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