How does it feel to be punished for a problem not of your making? Ask home buyers across the country. First, they got stood up by builders delaying their house handover for years on end. The home loan interest meter meanwhile kept ticking. And then, the taxman threw the rule book at them; so, the interest on their home loans got just a fraction of the regular tax break. Why? Because three years had passed since the loan disbursement year and construction of the house was not complete; so the tax break on the home loan interest was just ₹30,000 a year, as against the usual ₹2 lakh for self-occupied properties.

The recent Budget gave some relief to such home buyers and upped the period of construction completion from three to five years. Now, this is very welcome, but not enough. That’s because scores of builders have delayed handover of their projects even beyond five years. There are umpteen cases of home buyers waiting endlessly — close to a decade even — for their houses to be handed over.

While especially common in erstwhile realty boom towns such as Noida, this is a pan-India problem with truant builders across the country, from Mumbai to Chennai, procrastinating for what seems like eternity. Stressed buyers are already at their wits’ end, in many cases shelling out both rent and home loan EMI. It’s unfair to deny them the full benefit of the tax concession on interest, on a technicality they have little control over. The intent of the law may have been to prevent diversion of home loan money. But genuine home buyers are facing the brunt. They deserve the tax break in full. The government has responded by increasing the construction time limit from three to five years. But it needs to go further and do away with the time limit altogether. Buyers should not be made to pay for the failings of builders.

Chief Research Analyst

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