With the Government of India introducing housing schemes like the Pradhan Mantri Awas Yojana, there has been a considerable rise in home loan borrowers. While interest rate subsidy on home loans remains the scheme’s highlight, borrowers can also enjoy other benefits on the advances availed. Tax benefits are one of them.
Home loan tax benefits are provided under different sections of the Income Tax Act 1961. Individuals can thus claim deductions as and when applicable to make substantial savings. You can also use an online home loan tax benefit calculator to find how much you can save. Such deductions include the following.
- Section 80C
Under Section 80C, home loan borrowers can claim exemption of up to Rs.1.5 lakh per year on the principal component of EMI payment made until the tenor ends. The exemption is only applicable when you do not sell a house within 5 years of its acquisition.
It also allows an exemption for the payment of stamp duty and registration charges within the same limit.
- Section 24(b)
Home loan tax benefits under Section 24(b) include deductions of up to Rs.2 lakh on the interest component of EMI paid. These deductions can be claimed annually as well.
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- Section 80EEA
Section 80EEA also allows additional exemption of up to Rs.1.5 lakh on interest paid. The section is applicable for affordable houses with a stamp value not exceeding Rs.45 lakh.
Tax benefits on home loans are also available during the pre-construction period of a house. It is applicable in case one purchases an under-construction property with the loan and is yet to move in but paying EMIs.
Also Read: Tips for Utilizing Income Tax Benefits on Home Loans to the Fullest
