How did tax deductions change for the taxpayers post Budget 2019?

Interim Budget 2019 has announced some significant changes which have a direct impact on individual taxpayers, especially those who have invested in house or properties. While on one hand, the government has proposed to exempt levy of income tax on notional rent on a second self-occupied house, on the other hand, it has restricted the taxpayers from availing the benefit of set-off loss from house property. Owing to these two vital tax-related announcements, certain tax deductions have changed for the taxpayers post Budget 2019. To know more about how the new budget has affected the tax exemptions and benefits for individual taxpayers in the country check out here:

Tax exemption on notional rent for the second home

This year has brought good news for all individuals who own two houses in their name by removing the necessity of paying tax on notional rent. In the Interim Budget 2019, the government has declared a tax exemption on notional rent for the second occupied homes. The budget has proposed to consider the second house owned by an individual as self-occupied, irrespective of whether they have put the property on rent or not. This means, while earlier the property owners were charged with tax on their notional rental income in event of having more than one self-occupied house under the Income Tax Act, 1961, from this year onwards they no more need to pay tax on notional rent for owning a second home. This proposal, besides being beneficial for the house owners, has also come as a sign of relief for the real estate industry struggling with low demand.

Restriction on tax benefit of set-off loss from house property

While the Interim Budget 2019 has made the homeowners happy, it has hurt the home loan borrowers in the country, especially those who have more than one home loan in their loan portfolio. While until the financial year 2016-17, the borrowers were allowed to avail tax break on the entire interest paid considering ‘loss’ on home loan for let-out or deemed let-out properties under the Income Tax Act, 1961, as per the new budget the borrowers are restricted to avail the benefit of set-off loss from house property to a maximum of Rs.2 lakh per financial year starting from the financial year 2019-20. The balance loss in such cases can be carried forward to the upcoming eight years. Due to this change in the tax rules, the home loan borrowers are now restricted to the limit of Rs.2 lakh every financial year to set off the entire loss against other income. This means people who have more than one home loan in their name are going to feel a pinch on their pocket from this year onwards.

To conclude, it can be said that the Interim Budget 2019 has essentially changed the tax benefits for people with two properties and home loans. Even though it has given some tax relief to people occupying two properties, it has restricted the tax benefits of set-off loss from house property, thus making it stricter for the home loan borrowers.  Additionally, To know more about how to file income tax return online or e-filing, benefits, who are eligible to file ITR etc visit here.

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