What the Union Budget Means for Bangalore Home Buyers

Every year, home buyers watch the Union Budget for relief. This post looks at the Union Budget impact on home buyers in 2026, and how it applies to an under-construction home like Codename Club Class.

Home Loan Interest Deduction: Budget Position

On the home loan interest deduction budget question, the Union Budget 2026-27 kept the existing position. Interest on a loan for a self-occupied home remains deductible up to ₹2 lakh a year under the old tax regime, despite industry calls for a higher limit. The new tax regime still offers no deduction for interest on a self-occupied home.

Housing Tax Changes Under the New Act

The bigger housing tax changes this year came from the Income-tax Act, 2025, which replaced the 1961 Act from 1 April 2026 and renumbered many sections. Familiar deductions, such as those for home loan principal and interest, carried over in substance, but under new section numbers. The new tax regime is now the default, so buyers who want housing deductions need to opt for the old regime.

Infrastructure Spending

The Budget continued heavy spending on infrastructure, with emphasis on rail, metro expansion and urban development. For North Bengaluru, where the Pink Line (targeted December 2026) and the Blue Line airport stretch (targeted around June 2027) are close to opening, continued infrastructure investment supports the case for the corridor.

Affordable Housing

Funding continued for completing affordable housing under the government's urban housing programme. That has little direct effect on premium homes, but steadier completion in the affordable segment supports confidence in the wider market.

What It Means for an Under-Construction Home

For Club Class, where possession is targeted for 2029, the Budget changes little in the short term:

• Interest paid during construction can be claimed in five equal instalments after completion, under the old regime.

• The principal deduction begins after completion.

• GST remains 5% on under-construction residential units, without input tax credit.

What Buyers Should Do

• Compare the old and new regimes with and without your home loan.

• Check current section numbers and limits under the new Act with a tax adviser.

• Watch for state-level changes, such as Karnataka's 2025 increase in the registration fee to 2%.

State Costs Still Matter

Budget headlines focus on income tax, but state charges often matter more to a buyer's total cost. In Karnataka, stamp duty for homes above ₹45 lakh is 5% plus cess and surcharge, and the registration fee rose to 2% in August 2025. On a ₹2.15 Cr home, those state charges add up to roughly ₹16 lakh, far more than a typical year's tax saving from housing deductions.

The Takeaway

The Union Budget impact on home buyers in 2026 is mostly about continuity: deductions unchanged, infrastructure spending continued, and a new tax law to work through. Read about tax benefits of buying before March 31, or see unit prices on our price page. This is general information, not tax advice.

Related reading: tax benefits of buying before March 31 and Karnataka stamp duty on flat purchase.

FAQs

1. Did the Budget raise the home loan interest limit?
   No. The ₹2 lakh limit for a self-occupied home under the old regime was kept.

2. Can I claim home loan interest under the new regime?
   Not for a self-occupied home.

3. What is the new Income-tax Act?
   The Income-tax Act, 2025, which replaced the 1961 Act from 1 April 2026 and renumbered many sections.

4. Does the Budget affect GST on flats?
   No change: GST remains 5% on under-construction residential units without input tax credit.