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The <keyword id="6360189" type="COMPANY" weightage="100" keywordseo="Union-Budget">Union Budget</keyword> for 2016 has been presented, and amidst a lot of other things, the common man has been cheered with an increased relief in tax to make up for the rent. 
 Finance Minister Arun Jaitley announced a bigger <keyword id="6623638" type="UNKNOWN" weightage="100" keywordseo="tax-relief">tax relief</keyword> on House Rent Allowance (HRA), from 24,000 per annum to Rs 60,000 per annum if the taxpayer is not having a home of his own and doesn’t get HRA from the employer. 
 
Also, people earning up to Rs 5 lakh a year will now get a tax relief of Rs 5,000, as compared to Rs 2,000 previously. 
 
While starting his speech, Jaitley stressed that despite slow global economy, the Indian economy had held its ground, because of which World Economic Forum (WEF) and International Monetary Fund (IMF) had hailed India as a bright spot.

Budget 2016: No home or HRA? It’s time to take some tax relief on rent

Planning a <keyword id="6358021" type="PERSON" weightage="20" keywordseo="budget">budget</keyword> for 2017 and thinking of buying your dream house? If yes, you should definitely not overlook some of the tax benefits that were introduced in Budget 2016. Home loan borrowers can get additional benefits, if they qualify. Also, if you haven’t received <a href="http://www.businessinsider.in/searchresult.cms?query=House+Rent+Allowance&amp;sortorder=effectivedate">House Rent Allowance</a> (HRA), you should also check as to whether you can claim the increased tax break given to them in Budget 2016. 
 
Under Section 80EE of the <a href="http://www.businessinsider.in/searchresult.cms?query=Income+Tax+Act&amp;sortorder=effectivedate">Income Tax Act</a>, 1961, first-home buyers availing home loans in 2016-17 are allowed to take additional tax benefit of up to Rs 50,000. So, a home loan borrower paying interest on the loan can claim deduction of interest so paid from his/her gross total income up to a maximum of Rs 2 lakh per annum under Section 24. However, there are some conditions attached to it and they are: 
 
The additional deduction with respect to interest on loan taken will be applicable only for residential self occupied house property. 
 
It's only for first-time home buyers. 
 
The maximum additional benefit is capped at Rs 50,000 a year. 
 
The value of the house for which loan is taken cannot exceed Rs 50 lakh. 
 
The loan amount cannot exceed Rs 35 lakh. 
 
The loan has to be sanctioned between April 1, 2016 and March 31, 2017. 
 
Illustratively, on a home loan of Rs 35 lakh at 9.6/8.6 per cent interest for 15 years, the first year interest amount comes to approximately Rs 3.3 lakh and Rs 2.96 lakh, respectively. 
 
Other thing that one can look for is the increase in time period for claiming deduction of interest. In a home loan, the interest payable up to Rs 2 lakh gets deducted from gross total income while computing income from self-occupied house property. However, it is only applicable in cases where the acquisition or construction of the house is completed within three years from the end of the financial year in which the loan was taken. 
 
In <a href="http://www.businessinsider.in/searchresult.cms?query=Budget+2016&amp;sortorder=effectivedate">Budget 2016</a>, there was a relaxation in the time period and the <a href="http://www.businessinsider.in/searchresult.cms?query=tax+benefit+&amp;sortorder=effectivedate">tax benefit </a>would hold even if the acquisition or construction is completed within five years from the end of the financial year in which the capital was borrowed. 
 
All those getting house possession this year, this extension gives a relief. With builders not completing projects on time and delivery of homes getting delayed, this change in tax rules will benefit several home loan borrowers and they will not suffer (due to inability to avail tax benefit) because of builder's default in handling over the homes in time. 
 
One can also look for benefit, if they aren’t getting HRA. Section 80GG provides for a deduction of any expenditure incurred by an individual in excess of 10 per cent of his total income towards rent payment with respect to any furnished or unfurnished accommodation occupied by him as his residence if he is not granted HRA by his employer, to the extent that such excess expenditure does not exceed Rs 2,000 per month or 25 per cent of his total income for the year, whichever is less. 
 
In Budget 2016, relief was provided to such employees. The maximum limit of deduction was increased from the existing Rs 2,000 per month to Rs 5,000 per month.

These were the home loan tax benefits that were announced during Budget 2016

July's here, and as we inch closer to the budget, which is set to be presented around the latter half of July, there is much talk about how it will affect our pockets. Reports suggest the government is considering raising the <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> threshold from existing Rs 50,000 to Rs 1,00,000, amidst other things. The most common wish for a salaried employee is to reduce the income tax rates across all slabs, but at the moment, this seems unlikely. That aside, we decode the common man's wish list and what they look forward to in terms of <keyword id="22225988" type="General" weightage="20" keywordseo="income-taxes" source="keywords">income taxes</keyword> as the Finance Minister <keyword id="19916618" type="General" weightage="20" keywordseo="nirmala-sitharaman" source="keywords">Nirmala Sitharaman</keyword> drafts the budget. <h2>Wish 1: Raise the standard deduction to Rs 1 lakh</h2>A standard deduction is a fixed amount that you can deduct from your taxable income right away, to reduce your overall tax liability. You do not need to furnish any proofs for this amount. Currently, this stands at Rs 50,000, under both old and new tax regimes. Raising this threshold to Rs 1,00,000 will mean more disposable income in your hands. And as per the policy experts, this is the most likely change that we can expect under the new budget. <h2>Wish 2: Increase the <keyword id="20228341" type="General" weightage="20" keywordseo="basic-exemption-limit" source="keywords">basic exemption limit</keyword> in new tax regime</h2>As per EY's pre-budget expectation report, an increase in the basic exemption limit from the present Rs 3,00,000 to Rs 5,00,000 would immensely benefit the common man. Earlier, this limit was set at Rs 2,50,000. Note that unless you specifically opt for the old regime, the new tax regime is considered as your default choice starting 2023. If your annual income is equal to, or falls below this basic exemption limit, you do not have to pay any income tax. <h2>Wish 3: Increase tax-free limit of LTCG gains </h2>At present, if you sell any equity mutual fund unit or share after more than 12 months of holding it, you'll have to pay a 10% long-term capital gains (LTCG) tax. However, within one financial year, long-term capital gains below Rs 1,00,000 are tax-exempt. As EY's report notes, raising this extant tax-free limit to Rs 2 lakh would be beneficial, especially in boosting long-term investing sentiment in the country. But will this come true? Only Nirmala Sitharaman knows! <h2>Wish 4: Consider some tier-2 cities as metros for HRA exemption </h2>Residents of Gurugram, Noida, Bengaluru, listen up! HRA, or House rent allowance is a crucial component of our salary, and hence, our tax planning as well. You can get HRA exemption on the lowest amount amidst these 3: 1. Actual HRA received 2. 50% of salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) 3. 40% of salary for non-metro cities 4. Rent paid- 10% of salary But its no secret that residents of nearby cities like Noida, Gurugram, Faridabad, or rapidly developing urban hubs like Pune, Ahmedabad, Ghaziabad, Hyderabad, Bengaluru, Thane bear the brunt of sky-high residential rents that takes a huge toll on their monthly income. Yet, they cannot claim 50% of their salary for HRA exemption. Since these cities has been classified as a non-metro, residents can claim a maximum of 40% of their salary as exemption. In case rent exceeds Rs 1,00,000 annually, you are also required to furnish the PAN details of landlord, along with a formal rental agreement. Consider this. You live in Delhi, and have an annual income of Rs 10,00,000. For HRA purposes, you can claim exemption of up to Rs 5,00,000, since Delhi is considered a metro. But, if you live in Ghaziabad, or Noida, the limit available to you sharply falls down to Rs 4,00,000. This budget, as reports note, considering these cities as metros for tax purposes would provide some relief to the common man's pocket. Per a recent report by ANAROCK research, the top 7 cities in the country (Mumbai metropolitan region, Hyderabad, Bengaluru, Pune, Delhi NCR, Chennai and Kolkata) saw an average price rise between 13-39% on a yearly basis. In fact, it was Hyderabad recorded the highest yearly price rise in residential property last quarter, jumping by as much as 39%. <h2>Wish 5 : Enhance exemption limits under the old regime</h2>The list is endless, but so are our wishes! Experts are also suggesting an enhancement in the existing limit for deduction towards interest on housing loan for self-occupied house. From its present limit of Rs 2 lakh, it should be taken to Rs 3 lakh. Also, the Rs 2-lakh cap on set off of house property loss against other heads in the same year should be done away with. For senior citizens, there should also be greater clarity on how funds received from <keyword id="19919089" type="General" weightage="20" keywordseo="nps" source="keywords">NPS</keyword> (National Pension System) via the systematic lumpsum withdrawal plan should be taxed. Well, we can only hope some, if not all of these wishes come true when finance minister presents the union budget in the parliament this month.

Budget 2024: Increase standard deduction, exemptions and more, an aam aadmi's wishlist

The budget 2016 outlined the shift in focus to the rural <keyword id="34412" type="ORGANIZATION" weightage="100" keywordseo="economy">economy</keyword> as the finance minister introduced a slew of taxes and cess to be imposed on services to help rural welfare programmes. It also reflected the government’s concern and priority to improve the investment climate with a view to stimulate growth. The massive push for improvement in infrastructure including outlay for roads, railways and development of smaller airports to improve connectivity will benefit the <keyword id="6354553" type="COMPANY" weightage="100" keywordseo="real-estate">real estate</keyword> sector in the long run. The abolishment of <keyword id="375780" type="ORGANIZATION" weightage="100" keywordseo="DDT">DDT</keyword> is a welcome move and will put the REIT structure in India at par with global standards. REIT listing will soon be a reality. The finance minister also announced certain other measures to bring investment into the real estate sector, while giving special emphasis on affordable housing, few long pending demands of the real estate sector were not met in the budget. Industry status to the real estate sector, single window clearance, tax concessions on home <keyword id="35450" type="COMPANY" weightage="100" keywordseo="insurance">insurance</keyword> premiums are some of the measures that could have significantly boosted the sentiments in the sector. 
 
I have listed below few key points offered to the real estate sector by the government in the budget. 
 
Removal of Dividend Distribution Tax (DDT) on Real Estate Investment Trusts (REITs): DDT has long been one of the biggest hurdles that made REIT financially unviable for Indian commercial stakeholders. Removal of DDT (tax levied on the dividend paid to investors) will result in a rush of investment in REITs and this could prove to be decisive for the sector. This will help developers raise funds and will also effectively address issues pertaining to transparency, liquidity and execution of property developments across the country, that will spur growth in the future. 
 
Boost for first time home buyers: By introducing an additional interest deduction of Rs 50,000 on home loans not exceeding Rs 35 lakhs, and the value of homes not exceeding Rs 50 lakhs the budget has given some reason to cheer to the first time home buyers. This could boost demand for housing in smaller cities where the cost of ownership is on the lower side. However, this will make little or no difference if one is buying a property in any metro city in India where housing prices are significantly higher. So, the relief will not make any material difference to the sector. 
 
Modernization of land records under digital India initiatives: The government has provided Rs150 crores for modernization of land records which aims at ushering in the system of providing online access of land details and plugging of loopholes. This is a welcome move for the sector as the integrated land management system will not only increase the transparency in the whole system but will also expedite the process of land acquisition and enable holistic growth. 
 
Tax deduction for construction of affordable housing: The <keyword id="6355686" type="COMPANY" weightage="100" keywordseo="Service-tax">service tax</keyword> exemption for developers focusing on affordable housing with unit sizes not exceeding 30 square meters in the larger cities and 60 square meters in the smaller cities is definitely a positive move and will encourage private participation as well. This will increase profits making it easier for the developer to attract foreign and domestic <keyword id="6362476" type="ORGANIZATION" weightage="100" keywordseo="investments">investments</keyword> in housing projects. It is in line with the governments vision to boost affordable housing. It will be a challenge though for developers to deliver in the three year time frame given the lack of single window clearance for the projects. 
 
Tax relief on HRA: The increase in reduction limit from Rs 24,000 per annum to Rs 60,000 per annum is a welcome move and will give the much needed push to rental housing across major cities in India. It could also boost demand in the long run. 
 
(The article is authored by Surendra Hiranandani, Chairman &amp; Managing Director, House of Hiranandani) 
 
Image credits: indiatimes

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Budget 2016: No home or HRA? It’s time to take some tax relief on rent

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These were the home loan tax benefits that were announced during Budget 2016

BI India Bureau

Budget 2024: Increase standard deduction, exemptions and more, an aam aadmi's wishlist

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DDT exemption on REIT will be a game changer for the real estate sector: Hiranandani

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