Budget 2022: From cut in home loan interest rates to rise of health insurance premiums, here’s common man’s wishlist

 With yet another pandemic sweeping the country, taxpayers' expectations for the Union Budget 2022 have skyrocketed.

While the government is taking steps to get the economy back on track, it is also critical to provide relief to the general public in order to help them cope with the effects of the crisis.

The ordinary man's expectation is for the tax burden to be reduced and for the tax compliance and administration structure to be simplified.

The following are some of the primary expectations of the average person from this Budget:

1. Deduction of interest on housing loan during construction period

Interest on a home loan received during the construction of a property is allowed as a deduction in five equal instalments starting from the year of completion of such house property, according to current tax regulations. Many home buyers suffer difficulties as a result of this provision, as they must pay pre-EMI interest to banks/financial institutions each year, but the corresponding tax deduction is deferred to future years. This places an undue financial strain on property buyers during the construction period, which is exacerbated if the development is delayed for any reason.

It has been suggested that interest paid throughout the construction period may be deducted in the year of payment. Apart from the financial benefits, this would make compliance easier for taxpayers because they would not have to keep track of interest payments for an extended period of time.

Aside from the aforementioned, a larger interest deduction on house loans is projected to stimulate the real estate sector. Currently, a home buyer can claim a deduction of up to Rs 200,000 for interest paid on a loan acquired for the purchase or construction of a self-occupied residential property during the year. This limit also applies to interest accrued prior to the start of construction. To provide more tax benefits to taxpayers, this ceiling should be raised.

2. Increase in quantum of deduction under Section 80C

With the goal of increasing household savings, the Finance Act 2014 raised the threshold for deduction under Section 80 C of the Income-tax Act, 1961 (the Act) from Rs 100,000 to Rs 150,000. The household saving potential has been strained as a result of inflation on the one hand and additional channels for consumption expenditure opening on the other.

Currently, the deduction allowed under section 80C applies to a wide range of eligible investments/expenses, including life insurance premiums, employee contributions to Provident Funds, Public Provident Funds (PPF), National Pension Schemes (NPS), housing loan principal repayment, and equity-linked savings schemes (ELSS).

Individual taxpayers expect the limits of different investment/expenditure-related deductions under Section 80C of the Act to be increased to Rs 250,000, achieving the dual goals of boosting savings and lowering tax. This will ultimately result in more cash on hand, which can be used for other purposes. Alternatively, the government may consider establishing distinct deduction limits for principal repayment on mortgages. This benefit will also help to improve the real estate market and will be another step toward the government's goal of providing affordable homes to the average citizen of the country.

Aside from ELSS, debt and hybrid funds can be deducted under section 80C to encourage investors to diversify their portfolios.

3. Increase limits of deduction on health insurance premium

Section 80D allows you to deduct payments for health insurance premiums for yourself, your family, and your parents. An individual can claim a deduction for health insurance premiums paid for self, spouse, and family up to Rs 25,000 (Rs 50,000 for senior citizens) under Section 80D, and a deduction for premiums paid for parents up to Rs 25,000 (Rs 50,000 for senior citizens). Given the rising cost of health insurance premiums over time, as well as rising healthcare costs due to COVID-19 and other factors, the existing deduction limit of Rs 25,000 should be doubled to Rs 50,000. (and from Rs 50,000 to Rs 1,00,000 for senior citizens). This decision will also encourage more people to purchase health insurance policies, contributing to the insurance industry's growth.

Conclusion

There's no need to be discouraged if your personal loan application is turned down. To boost your chances of loan approval, simply work on improving your credit report and following the methods outlined above. Once you've completed this checklist, you're ready to submit your personal loan application.To find about the best pricing and deals, call our toll-free number +91-9477079053. They'll help you in every way they can. Please contact me at Best Home Loan In India if you have any more. 

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