A common misconception about India's new tax regime is that it eliminates all deductions, but this assumption proves incorrect when examining home loan interest provisions. Section 24(b) of the Income Tax Act continues to provide relief for taxpayers with rented properties, though with significant restrictions compared to the previous regime.

Section 24(b) Deduction Mechanism

Under the new tax regime, taxpayers who have let out their properties can still claim interest paid on home loans under the "Income from House Property" head through Section 24(b). However, this benefit applies exclusively to rented properties and remains unavailable for self-occupied homes.

The deduction framework operates differently from the old regime's more flexible structure. While taxpayers can claim interest deductions, the treatment of any resulting losses has become more restrictive.

Income vs Interest Payment Scenarios

The practical application of Section 24(b) depends heavily on the relationship between rental income and interest payments:

When rental income falls short of interest payments, the resulting loss under "Income from House Property" cannot be freely adjusted against salary or other income sources, unlike the old regime. Additionally, such losses typically cannot be carried forward, significantly reducing the provision's effectiveness.

Documentation and Compliance Requirements

Taxpayers claiming this deduction must provide comprehensive documentation during ITR filing, including:

• Lender name and complete details
• Loan account number
• Loan sanction date
• Total interest paid during the assessment year
• Supporting proof and certificates

Inaccurate or incomplete information can result in ITR rejection or notices from the Income Tax Department, making proper documentation crucial for successful claims.

Practical Limitations and Considerations

The new regime's approach to house property losses creates practical challenges for taxpayers. When interest payments exceed rental income, the excess amount's treatment depends on specific assessment year rules and Central Board of Direct Taxes clarifications. While some years may allow limited set-off or carry-forward provisions, these typically don't extend across different income heads.

This restriction makes the deduction considerably less beneficial than under the old regime, where losses could be more freely adjusted against other income sources. Taxpayers should avoid assuming blanket entitlements and should consult official guidance or tax professionals before relying on this provision for tax planning purposes.

Complete Circle Consultants' Managing Partner and CIO Gurmeet Chadha has presented a comprehensive wish list for Budget 2026 as the Prime Minister's Office begins discussions with leading economists. The market expert has outlined three key recommendations aimed at boosting economic momentum through targeted reforms in housing finance, precious metals monetisation, and capital gains taxation.

Three-Point Economic Agenda

Chadha's proposals focus on addressing key areas of the economy through strategic policy interventions. His recommendations were shared publicly as the government prepares for Budget 2026, emphasising the need for reforms that can have deep-rooted impact on economic growth.

Affordable Housing Initiative

The first recommendation centres on expanding affordable housing access through enhanced loan limits and preferential interest rates. Chadha proposes increasing the affordable housing home loan limit to ₹25 lakh with special rates of 5-6%. The initiative specifically targets Non-Resident Indians through campaigns promoting home ownership in India.

The proposal aims to capture demand from blue-collar workers including electricians, chefs, welders, and drivers who aspire to own homes in their native towns or villages. According to Chadha, this approach would generate increased remittances and stimulate housing sector activity.

Precious Metals Monetisation

The second proposal addresses gold and silver monetisation through specialised lending mechanisms. Chadha suggests offering loans against gold and silver at repo plus 200 basis points, translating to rates of 7-8% for three-month tenures. The scheme would include inherited jewellery, bars, and coins up to ₹10 lakh in value.

This recommendation comes amid exceptional precious metals performance in 2025. According to Augmont, gold has risen by 65% while silver has gained 150%, marking the best yearly performance for precious metals in more than four decades.

Capital Gains Tax Reform

Chadha's third recommendation focuses on reducing Long Term Capital Gains tax to 10% from current levels. He highlighted that Securities Transaction Tax collections have reached ₹36,000 crore and are projected to end the year at ₹50,000 crore, providing fiscal space for LTCG reduction.

The current tax structure exempts long-term capital gains on listed equity shares and mutual fund units up to ₹1.25 lakh for securities held for 12 months or more. Short-term capital gains tax on equity shares sold within one year stands at 20%, increased from 15% prior to July 23, 2024.

Chadha argues that the current LTCG structure makes India less attractive globally and negatively impacts investor sentiment. His proposal seeks to address these concerns while maintaining government revenue through the substantial STT collections.

Market Context and Outlook

The recommendations come as the government prepares Budget 2026 with focus on demand revival and private investment thrust. Chadha also expressed hopes for stability in financial and currency markets in 2026, which would enable government reforms to achieve more substantial and lasting economic impact.