Winning Bizness Desk
Mumbai. It will no longer be possible to claim tax deduction twice on Home Loan Interest Rate as the government has finally closed the loophole in the recently presented budget, which homebuyers used to take benefit. In fact, some people were claiming deduction on interest twice at the time of repaying the loan and at the time of selling the property. But now this will not happen. Under the Income Tax Act, taxpayers can claim a deduction for interest up to ₹ 2 lakh per annum paid on home loan under the old tax regime. But many buyers also add this interest expense to the acquisition cost (the total cost of buying the house) to calculate the capital gain at the time of selling the house. This reduced their capital gains tax outgo. In the absence of adequate law in this regard, many taxpayers were doing this to save tax.
Deduction not part of the acquisition cost
After the implementation of the provisions of Budget 2023, it will no longer be possible to do so. Home loan interest claimed as a deduction cannot be included as part of the acquisition cost or improvement cost of the house under the proposed changes in the Income Tax Act. It will become effective from 1 April 2023. Karan Batra, founder of CharteredClub.com, said that this option was available till now but we were warning all the customers that it is not right. Because how can you claim the deduction twice?
Important changes will be effective
Interest on home loan claimed as tax deduction will not be allowed to be added to the cost of acquisition or improvement of the property while computing capital gain on sale of house property. Short-term capital gain on sale of property is taxed at 30% without indexation and long-term capital gain at 20% with indexation. With the loophole of including interest cost in capital gains calculation being done away with. Under Section 80C of the Income Tax Act, you can claim a deduction for home loan repayment of up to Rs 1.5 lakh.