Tax Deduction on Home Loan: The Government of India gives you huge tax exemption on taking home loan. If you take a home loan, you will have to pay Rs 5 lakh in your income tax. You can get a discount of up to. In this article we will tell you how you can avail tax exemption by taking home loan.
Tax Deduction on Home Loan: Rs 5 lakh in tax for individuals taking home loans. Get the benefit of exemption up to Rs. 1.5 lakh in tax on payment of principal amount of home loan under Income Tax Section 80C. Deduction of up to Rs 2 lakh and tax on home loan interest payments under section 24(b) up to Rs 2 lakh. Reduction up to. Apart from this, to promote affordable housing, the government has announced another tax cut benefit. If you have paid so much interest on home loan that your tax can be deducted even after tax deduction under Section 24(b) of Income Tax, then you can now pay an additional Rs 1.5 lakh in tax under Income Tax Section 80EEA. You can claim deduction up to.
| Sections of Income Tax Act | tax deduction |
| Section 80C | Deduction up to ₹1.5 lakh (inclusive of stamp duty and registration fees) on repayment of home loan principal amount. |
| Section 24(b) | Deduction of up to ₹2 lakh on home loan interest payments. |
| Section 80EEA* | Deduction of ₹1.5 lakh on home loan interest payments for first-time home buyers (for customers who have taken home loan between April 1, 2019 and March 31, 2022) |
Tax exemption under Income Tax Section 80C
According to Section 80C of the Income Tax Act:-
Rs 1.5 lakh in income tax on payment of home loan principal amount. You can get a deduction of up to. This may also include stamp duty and registration fees, but these can be deducted only once in the year in which they are paid.
Home loan should be taken only for purchasing a new house or constructing a house.
Note: If you sell the house within 5 years of purchasing it, the tax deduction received so far under Section 80C will be added to your income in the year when you sold the house.
Tax deduction on home loan interest payment in Income Tax Section 24(b)
- Rs 2 lakh in tax on payment of home loan interest. You can claim deduction up to. The house for which the loan has been taken, whether you are living in it or it is vacant.
- If you have given that house on rent, then you will not get the benefit of tax deduction, you will get tax deduction if:
- Home loan taken on or after 01-04-1999
- The house must have been constructed or you have started living in it within the next 5 years from the financial year in which the home loan was taken.
- Rs 30,000 on interest on loan taken. A deduction of up to Rs. 10,000 will be available if:
- Home loan taken before 01-04-1999 for purchase or construction of a house;
- Home loan taken on or after 01-04-1999 for repair or renovation of house
- Home loan is taken on or after 01-04-1999, but construction of the house is not completed within 5 years of taking the loan.
Additional deduction in tax on home loan interest payment for affordable housing under Income Tax Section 80EEA
Income tax section 80EEA was introduced in the Union Budget 2019 to promote affordable housing. Under this, first-time home buyers will save Rs 1.5 lakh in tax on interest payment on affordable housing loan. You can claim deduction up to. However, tax deduction under Section 80EEA is not available for home loans sanctioned on or after April 1, 2022, as the tax benefits offered under this section were for home loans sanctioned till March 31, 2022.
To avail this, the conditions are as follows:
- Home loan must have been taken between 1 April 2019 to 31 March 2022
- Stamp duty of purchased residential property is Rs 45 lakh. should not exceed
- You should not have any other property in your name when you get the loan.
- You should not be eligible to avail tax benefits under Income Tax Section 80EE
Note: Some banks/loan institutions also provide home loans to those who receive salary in cash or do not have sufficient income proof/income documents. Some of these banks/loan institutions are PNB Housing Finance, HDFC, LIC Housing Finance, Piramal Housing Finance and IDFC First Bank.
