The Non-Taxing Truth About Home-Buying in Mumbai

Purchasing a home is one of the most significant financial decisions one makes, especially in a city like Mumbai, where property prices often soar to towering heights. While the financial burden can feel overwhelming, understanding and utilizing tax benefits and legal provisions can alleviate much of this strain.

As an expert in Personal Financial Profession, I bring you a comprehensive guide to navigating the financial and tax-related aspects of home-buying.

1. Tax Benefits Under the Income Tax Act

Deductions on Home Loan Interest (Section 24(b))

Homebuyers can claim a deduction of up to ?2,00,000 annually on the interest paid for a self-occupied house property. If the house is not self-occupied, the entire interest paid can be claimed as a deduction, subject to certain limits.

Principal Repayment (Section 80C)

The principal component of your home loan EMI qualifies for a deduction under Section 80C, up to ?1,50,000.

Additional Benefits (Section 80EE and Section 80EEA)

• Section 80EE provides an additional deduction of ?50,000 on home loan interest for first-time homebuyers, provided the loan amount does not exceed ?35 lakh and the property value is below ?50 lakh.
• Section 80EEA allows an additional ?1,50,000 deduction for affordable housing under certain conditions.

2. GST Benefits

The Goods and Services Tax (GST) has undergone several reforms to make home-buying more affordable, particularly in the affordable housing segment.

• Reduced GST Rates: 1% GST for affordable housing (properties priced up to ?45 lakh in metro cities). 5% GST for other under-construction properties.
• No GST on Ready-to-Move Properties: Homes with a Completion Certificate issued by the builder are GST-exempt.

3. Stamp Duty and Registration

Stamp duty in Maharashtra is currently capped at 6% for residential properties, with a further concession available for female buyers, reducing it by 1%.

Registration fees in Maharashtra are fixed at ?30,000 for properties valued above ?30 lakh. Both these costs can be significant but are mandatory to ensure legal ownership.

4. RERA Compliance

The Real Estate (Regulation and Development) Act, 2016 (RERA), ensures transparency in property dealings. As a buyer, you must ensure that the property you are purchasing is RERA-registered. This gives you legal recourse in case of delays or discrepancies by the developer.

5. Maharashtra-Specific Incentives

Under the Pradhan Mantri Awas Yojana (PMAY) and the Affordable Housing Partnership (AHP), homebuyers in Maharashtra can avail of interest subsidies for loans up to ?6 lakh under the Credit-Linked Subsidy Scheme (CLSS).

Additionally, certain housing projects in Maharashtra offer waivers on stamp duty and GST as part of state policies to encourage affordable housing.

Smart Tips for a Stress-Free Home-Buying Experience

• Always consult a financial expert to optimize tax benefits.
• Choose properties that qualify for lower GST rates and other government incentives.
• Keep all receipts for registration, stamp duty, and GST payments for tax filing purposes.
• Ensure the property is RERA-compliant and has a Completion Certificate for ready-to-move homes.

Conclusion

The journey of home-buying in Mumbai can indeed feel taxing, but with the right knowledge of tax laws, GST benefits, and state-specific incentives, the process can be significantly simplified. A well-planned approach not only minimizes financial stress but also maximizes your savings and returns on investment.

At Shreyansh Consultants, we specialize in helping individuals make informed financial decisions, from tax planning to investment optimization. Let’s work together to turn your dream of owning a home into reality—stress-free and financially sound.

Let’s connect to discuss how you can save more while owning your dream home in Mumbai.