Check about home loan tax benefits and how to claim tax deduction on home loan


Buying or constructing a house can be quite expensive today, owing to the increased prices of properties and plots. This is where tax benefits come to the rescue of home loan borrowers. It helps them save a substantial amount each year as they start repaying their home loan. The exact tax rebate, based on the home loan principal and other charges, can be calculated using an income tax calculator.

Such calculators include heads where users can enter their home loan exemptions and calculate their total savings. According to the revised tax rates, slabs, and rebates, these online and offline tools are updated each year to reflect the latest values. For example, the income tax calculator will contain updated tax rates of the 2021 Union Budget.

Know all the home loan tax benefits you can enjoy

The Income Tax Act, 1961 proposes notable tax benefits for home loan borrowers, helping facilitate borrowing and repayment activities. These benefits are perhaps a good reason why you should opt for a home loan. Here are the different rebates applicants can claim on a housing loan in India-

1.      On home loan interest payment

As specified under Section 24 (B) of the Income Tax Act, home borrowers can claim deductions up to Rs.2 lakh on their interest payment. The interest rebate is calculated on an accrual basis, i.e., for each year separately. Note that the construction of the said property must be completed within 5 years, extending which will allow tax deduction only up to Rs.30,000.

2.      On principal repayment

Under Section 80C of the Act, housing loan borrowers are liable to enjoy a maximum of Rs.1.5 lakh deduction on the principal repayment. However, to claim benefits under this section, the concerned property cannot be sold within 5 years of possession. You can calculate the exact amount using an income tax calculator online.

3.      On stamp duty and registration fees

These deductions are also to be claimed under Section 80C, with a maximum deductible amount of Rs.1.5 Lakh. These one-time deductions can only be claimed for the year in which the borrower incurred these expenses.

4.      On a joint home loan

Tax benefits on the principal and interest components of a joint home loan apply to all co-applicants separately. Each applicant can claim deductions up to Rs.2 lakh and Rs.1.5 lakh on interest and principal repayment, respectively.

5.      Under Section 80EE

This deduction is valid solely for first-time homebuyers. On home loans above Rs.35 lakh, borrowers can claim deductions up to Rs.50000 on repaying the interest component. Moreover, the gross value of the concerned property must be below Rs.50 lakh in this case.

You can also check other tax-saving opportunities and advantages offered on a home loan before approaching a lender. Or, if you are an existing home loan borrower, you can estimate your income tax liabilities and deductions using a tax calculator.

Few reputed NBFCs and other commercial lending institutions extend unique pre-approved benefits to borrowers. Available on different financial products and services, these offers ensure a faster and hassle-free process of receiving credit. Mention your name and mobile number to check your pre-approved offer instantly.

To claim your home loan tax benefits, you need to calculate the accurate figures of deduction. You can use an income tax calculator for this. Salaried individuals can then submit the home loan interest certificate to their employer for TDS adjustment. Self-employed individuals are not required to submit the certificate anywhere.

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