What Are The Benefits Offered To First-Time Homebuyers In India?

[Kanika Shelatkar]

In India, owning a house is more than just having a property. It makes you feel proud, secure and a symbol of financial stability. Moreover, when it is your first home, you are excited about it and satisfied to achieve a goal. Nowadays, most are seeking to invest in residential property instead of living in rented houses as tenants.

The Pradhan Mantri Awas Yojana was introduced by the government in 2015. It gives first-time homebuyers a subsidy to make it affordable for lower and middle-income people. The subsidy rates differ according to the annual household income. A family earning up to Rs. 18 lakh annually is liable for the subsidy.

Benefits

The motivation to work hard and save money for your house is indispensable. The government launched the PMAY to support and encourage first-time home buyers in India, especially the Economically Weaker Section, Lower-Income Groups, Middle-Income Groups, and women. There are different tax benefits offered to them: 

Section 80 C

Under this, you claim up to Rs. 1.5 lakh principal amount repayment of the Home Loan.

Section 24

Here, you get a benefit of up to Rs. 2 lakh on the interest repayment of your loan. It applies only to self-occupied property. If you rent, there is no maximum limit on the amount to claim a deduction. Hence, you claim the entire interest amount or if it exceeds Rs. 2 lakh under the PMAY scheme.

Section 80 EE

A first-time homebuyer claims a tax deduction of Rs. 50,000 on the interest repayment. You save money for future expenses and other priorities instead of paying tax. It is a boon for all homeowners in India.

Housing for all

It is a Credit Linked Subsidy Scheme to make houses affordable for lower and middle-income sections. The subsidy gets offered at different rates depending on the income of the people. A person having income up to Rs. 18 lakh is eligible for this subsidy.

For annual income below Rs. 6 lakh, the subsidy is 6.5% on a principal component of Rs. 6 lakh, regardless of the total Home Loan. The income of up to Rs. 12 lakh annually gets a subsidy of 4% on a principal component of Rs. 9 lakh. The highest income category eligible for the CLSS is Rs. 18 lakh annually. The subsidy is 3% on a principal component of Rs. 12 lakh.

Maximum subsidy

The maximum subsidy-eligible for MIG 1 and MIG 2 is approximately Rs. 2.35 lakh and Rs. 2.3 lakh, respectively. The Indian real estate market is currently on a boom, making it the perfect investment time for those who have not done it yet. It offers guaranteed returns.