Written by : AK Agrawal
An experiences Chartered Accountant and Techno-Functional consultant working in industry for over 10 years dealing with multinational corporate clients. He is loves reading latest trend of technology trend.
Owning a house is a lifelong ambition for everyone since it provides both financial and mental comfort. The Indian government has traditionally favoured encouraging residents to own a home. It is why a house loan qualifies for a tax break under Section 80C. In addition, when you buy a property with a home loan, you get a slew of tax benefits that dramatically lower your tax bill. Many initiatives, such as the Pradhan Mantri Jan Dhan Yojana, illuminate the Indian housing industry by attempting to address concerns of availability and affordability.
In this section, we shall explore the home loan tax benefits offered to the house owners. In her budget address, Union Finance Minister Nirmala Sitharaman proposed that the government is extending the deadline for receiving extra deductions on house loan interest payments until March 31, 2022.
Tax benefits on Home loan ( 2021-2022 )
|Income tax sections||Maximum amount deductible|
|Section 24||Rs. 2 lakh p.a|
|Section 80C||Rs. 1.5 lakh p.a|
|Section 80EE||Rs. 50,000|
The latest updates from Union Finance Minister Nirmala Sitharaman's latest budget, delivered on February 1 2021, are as follows:
One must obtain a home loan for the purchase/construction of a house. The construction of such a house should end within five years from completing the fiscal year of the loan acquisition.
The EMI for home loan contains two components:
Section 24 enables taxpayers to deduct the interest portion of their EMI payments for the year up to Rs 2 lakh from their total income. The maximum deduction for interest paid on self-occupied residential property is Rs 2 lakh from the assessment year 2018-19. There is no particular upper limit to claim the interest on rented property.
However, one can claim the total loss that under the heading of Income from House Property limited to Rs 2 lakh. This deduction is available beginning with the year in which the house gets built.
Suppose you purchased an unfinished property and have yet to move in. Then, your eligibility to deduct interest on a home loan begins only when construction gets completed or instantaneously if you purchase a fully constructed property.
The income tax legislation allows you to deduct such interest, known as pre-construction interest, in five equal instalments from the year of the property purchase or the accomplishment of the construction activities. In addition to the deduction, you are normally allowed to claim from your home income derived. The maximum eligible amount, however, remains Rs 2 lakh.
Aside from the deduction for principal repayment, one can claim a deduction for stamp duty and registration expenses under section 80C. Yet, such deduction is available only up to Rs 1.5 lakhs. However, taxpayers may only claim these expenses in the year in which the expenditures are incurred.
Section 80EE has been reinstated with effect from the fiscal year 2016-17. Previously, the deduction permitted under Section 80EE was only available for two years, FY 2013-14 and FY 2014-15.
The term "joint home loans" indicates that the loan is carried out jointly. As a result, if individuals together take a house loan, they can claim a deduction for the home loan. For this deduction, the interest is limited to Rs. 2 lakh and the principal repayment is limited to Rs. 1.5 lakh in their individual income tax filings. Individuals must also be co-owners of the property acquired on loan to claim this deduction. As a result, if you apply for a loan with your family, you will be able to claim a greater tax deduction.
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Using Gotaxfile's income tax calculator, you can quickly calculate your tax advantages. It is an online tool that instantly estimates the amount based on specific home loan information. Some of these factors include the house loan amount, interest rate, current tax deductions, gross yearly wage, and so on. Purchasing a home in India is seen as a big investment choice. As a result, we provide the most appropriate investment advice at a reduced rate as well as additional perks to help you purchase your dream home.
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