The 2019 Union Budget came up with the proposal to increase the income tax benefits by Rs. 1.5 Lakh on interest payments of home loans. Thus, borrowers can now avail deduction of up to Rs. 3.5 Lakh.
This deduction is available under Section 80EEA which provides income tax benefits of up to Rs. 1.5 Lakh on the home loan interests paid. These home loan tax benefits are available over and above the existing exemption of Rs. 2 Lakh under Section 24(b).
These home loan tax exemptions can only be claimed to purchase houses with a stamped value of up to Rs. 45 Lakh. Homeowners can claim the benefits on loans availed till 21st March 2020. Thus, borrowers will be able to claim a maximum income tax deduction of Rs. 7 Lakh.
Income tax benefits under Section 80EEA are available to those availing home loans under the PMAY CLSS scheme.
Sections of the Income Tax Act that provide tax rebate on home loan:
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| Section 80C | Tax deductions on the principal repayment | Rs. 1.5 Lakh |
| Section 24 | Tax deductions on the interest amount payable | Rs. 2 Lakh |
| Section 80EE | Additional home loan interest tax benefit for first-time home buyers | Rs. 50,000 |
The Government of India extends these benefits as a form of relief to borrowers, making it more affordable.
On availing a home loan, you need to make monthly repayments as EMIs, which include two primary components – principal amount and interest payable. The IT Act enables borrowers to enjoy tax benefits on both these components individually.
1. Section 80C
2. Section 24
3. Section 80EE
Some Other Conditions to Note:
In case of a home loan jointly, every borrower can enjoy tax benefits on joint home loan from his/her taxable income individually. One can claim a maximum of Rs. 2 Lakh on the interest paid and up to Rs. 1.5 Lakh on the principal amount. Any family member, friend or even the spouse can be a co-borrower of a Joint Home Loan from Bajaj Finserv.
The only condition is that every applicant of the housing loan must be a co-owner of that residential property.
If you take a second home loan to purchase another property, tax benefits are applicable on the payable interests. Here, you can claim the entire interest amount paid as no cap is applied here.
Currently, individuals can claim only one property as self-occupied and make tax payments on the other based on notional rent. In the February 2019’s Interim Budget, a proposal has been put forward stating that an individual can claim a second home as self-occupied property. This aims to help borrowers save more in the form of taxes.
The process to claim tax benefits on a home loan is easy and simple.
Self-employed borrowers need not submit these documents. They must keep these handy to provide if a query arises in the future.
Home loan repayment is eligible for tax deductions under the Income Tax Act 1961. Home loan interest paid up to Rs.2 lakh per year is tax deductible u/s 24. Section 80C allows deduction against principal repayment of up to Rs.1.5 lakh every year. Additional deductions are available u/s 80EE and 80EEA.
The maximum tax deductible for a home loan is listed below under specified sections of the Income Tax Act 1961.
A person who has purchased a new house for self-occupation or to rent out can claim tax exemption on home loans u/s 24, 80C and 80EEA of the Income Tax Act 1961. You can also claim tax benefits if you are a co-owner of the house or a co-borrower.
Yes, you can claim home loan tax benefits for a property under construction u/s 80C. The following rules apply for such deduction.
Premiums paid for a home loan protection insurance plan are tax deductible under section 80C of the Income Tax Act 1961 only if the borrower makes repayment. Under specific circumstances, where the lender finances such insurance plan and the borrower repays via loan EMIs, deductions are not allowed.
A home loan top up is eligible for tax deduction u/s 24(b) and 80C only if it is used for –
Such a claim should also be backed up with valid receipts and documents.
Use the Bajaj Finserv’s Income Tax Calculator to compute the tax benefits without any hassle. It is an online tool which instantly calculates the amount based on certain home loan details. Some of those include home loan amount, rate of interest, existing tax deductions, gross annual salary, etc.
Simply enter the details required and check the tax benefits you can avail.
In India, purchasing a property is considered as a significant investment decision. Hence, approach Bajaj Finserv and avail the most competitive home loan interest rate along with other benefits to own your dream house.
