Finance Minister Nirmala Sitharaman used her first Budget speech on Friday to offer home buyers a further Rs 1.5 lakh off their taxable income for interest paid on affordable housing loans. With this, total interest deductions of around Rs 3.5 lakh can be claimed where the loan, of up to Rs 45 lakh, is taken by March 31, 2020.

What was announced

Sitharaman said the extra deduction was meant to give a further push to affordable housing. It applies to interest on loans taken until March 31, 2020 to buy a house costing up to Rs 45 lakh.

Relief already given in February

The new measure adds to tax relief announced in the interim Budget in February:

• The Section 87A rebate was raised to as much as Rs 12,500, from Rs 2,500 earlier. It applies to income of up to Rs 5 lakh a year, meaning no tax is payable up to that level.
• The standard deduction was raised to Rs 50,000, from Rs 40,000.
• Income up to Rs 2.50 lakh remains exempt, rising to Rs 3 lakh for senior citizens.

Other deductions and slabs

Section 80C separately allows a maximum deduction of Rs 1.5 lakh for items such as Public Provident Fund deposits, children’s school fees and stamp duty paid when registering a house. A further Rs 50,000 invested in the National Pension System qualifies for an extra deduction under Section 80CCD(1B).

The interim Budget did not change the tax slabs. Income up to Rs 2.5 lakh is not taxed, and the next band, up to Rs 5 lakh, is taxed at 5 per cent, which works out to Rs 12,500.

See also: Election news

Originally published on 6 July 2019. Rewritten on 9 October 2026.

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