Many important announcements have been made in the interest of the middle class in the Union Budget presented by Finance Minister Nirmala Sitharaman on Sunday. Along with this, big relief has also been given to home buyers. Under this, the income tax deduction of up to Rs 2 lakh on home loan interest in case of self-occupied property will now also include the interest paid before the acquisition or construction of the property.
If you understand in simple language, if you have taken a loan to build or buy a house and have paid the interest even before getting the possession, then now by adding that interest also, you will be able to get a total tax exemption of up to Rs 2 lakh.
The rules will be amended
For this, the government will amend Section 22(2) of the Income Tax Act, 2025. This new rule will be under the new tax law to be implemented from April 1, 2026. Till now, under Section 22(2), only a maximum exemption of Rs 2 lakh was available on the interest on home loan taken on self-occupied property, but the interest before the house was built or taken into possession was clearly not included in this limit. Now under the budget proposal, it will be ensured that pre-period interest is also included in the rebate of Rs 2 lakh on home loan interest.
how was the budget
Finance Minister Nirmala Sitharaman, while presenting a total budget of Rs 53.5 lakh crore in Parliament, announced several measures to promote small enterprises and manufacturing. With the highest-ever capital expenditure of Rs 12.22 lakh crore, the Budget presents a long-term roadmap to sustain economic growth amid rising global risks. There were no changes in personal income tax slabs, but the government announced tax and incentive measures aimed at promoting investment and making compliance easier for industry.
Among other measures, TCS (tax collected at source) on sale of foreign tourism packages has been reduced to two per cent, while on education abroad and medical expenses under the Liberalized Remittance Scheme (LRS) it has also been reduced to two per cent. Sitharaman said the new Income Tax Act, 2025, will come into force from April 1 and its simple rules and forms will be issued soon.