New Tax system: Under the new tax system, taxpayers desire to deduct home loan interest

 New Tax system: Under the new tax system, taxpayers desire to deduct home loan interest

Budget 2024: Currently, under Section 24B of Income Tax, a deduction of up to Rs 2 lakh may be made yearly from the interest rate on a house loan. This indicates that the maximum amount of money that may be deducted from home loan interest payments in a given fiscal year is Rs 2 lakh. This feature is only currently accessible under the previous tax system.

Budget 2024: The Union Budget 2023 included significant modifications to the new income tax system. The new income tax system is intended to be used more often by the government. However, taxpayers haven't showed much interest in it up to this point. The Union Budget 2020 made mention of this. It becomes operative with the 2020–21 fiscal year. For taxpayers who do not use tax-saving options, this system is advantageous. Compared to the previous system, these tax rates are lower. Numerous modifications were made to the Union Budget 2023 by Finance Minister Nirmala Sitharaman. He had said that the new tax system will provide standard deduction benefits. Additionally, under this system, the tax exemption threshold was raised.

The new tax system underwent these modifications in the Union Budget of 2023.

The Union Budget 2023's statements on the new tax system, according to experts, are insufficient. In his opinion, the government ought to extend the deduction for house loan interest under the new tax system. As a result, more taxpayers will use this regime. This is because a large number of employed individuals have taken out home loans in order to purchase homes. Every month, they pay the EMI. They benefited from the interest rate deduction on house loans under the previous tax system. Numerous taxpayers do not make investments in products that reduce their taxes. They may begin utilizing the new tax system if it offers the advantage of a deduction on house loan interest.

An annual deduction of Rs 2 lakh is permitted for house loan interest.

Section 24B of Income Tax now allows for an annual deduction of up to Rs 2 lakh on the interest rate on house loans. This indicates that the maximum amount of money that may be deducted from home loan interest payments in a given fiscal year is Rs 2 lakh. This feature is only currently accessible under the previous tax system. This lowers the tax obligation of borrowers for house loans considerably. Many people believe it is advantageous to continue under the current tax system because of this.

It is imperative that the new tax structure be appealing.

Many taxpayers will be able to take advantage of the new tax system if the benefit of this deduction is also provided by it. An yearly deduction of up to Rs 1.5 lakh is permitted from the principle amount of a house loan. However, this is covered under section 80C. Because of this, those who engage in tax savings are unable to benefit from it, since Section 80C only permits deductions of up to Rs 1.5 lakh.