Business

Know How to Avail an Additional Income Tax Deduction of Rs.3.5 Lakh on Home Loan

Published

on

By 2025, real estate sector in India is expected to contribute 13% of total GDP of the country. To live up to this expectation, various affordable housing schemes and tax benefits are on offer for prospective home buyers.

Income tax benefit on home loans can help buyers substantially reduce the income burden. The income tax act of India, 1961 has dedicated provisions for this cause, with various tax exemption clauses. These include –

  • Section 80C of ITA states that the funds used for repayment of the principal home loan amount can be exempted from income tax. The exemption is applicable for up to Rs. 1.5 Lakh every financial year. Any amount exceeding this is subject to standard taxation.
  • Section 24(b) provides a tax exemption on the interestrate payable on the total loan amount. This benefit is given for interest payments of up to Rs. 2 Lakh every financial year.
  • Section 80EEA is also dedicated to reducing the burden of interest on the borrowers. You can get an additional Rs. 1.5 Lakh on your total disposable income as the tax is exempted. Note that this tax waiver is only applicable till 31st March 2020 for properties of up to Rs. 45 Lakh.
  • In case of top up loans, an additional tax waiver Rs. 30,000 can be availed on the interest liable.

You can easily calculate the total tax waived on your home loan repayments using a home loan tax benefit calculator.

However, several other criteria need to be satisfied to avail these policies for tax saving on home loans.

  • Exemptions are only applicable if the property has already been constructed, and is utilised as a residential property.
  • If the borrower sells the property after 5 years of ownership, the tax benefits will become invalid. If the returns are already disbursed, the exemptions are reversed and added to the following year’s income.
  • In case the house is given on rent, the entire home loan interest is waived off from tax exemptions.

Ensuring you fulfil the above mentioned restrictions, you can easily apply for the returns – by yourself, or through your employer. Having the home loan interest certificate at your disposal will smoothen this process by a significant amount.

The number of home loans acquired is increasing in number, mainly due to these benefits of tax waivers, reasonable housing loan interest, and subsidised rates at which you can avail home loans via government sponsored policies.

If you are a prospective home buyer, you should make a note of these exemptions to benefit from them. Additionally, you should also follow up on pointers which can help you avail a home loan at the most beneficial terms and features.

Home loan eligibility and documentation

You can quickly calculate your home loan eligibility by checking whether you satisfy the following criteria. Note that applicants should be between 25 and 65 years of age. A CIBIL score of 750 and above can help individuals avail competitive interest rates as well as other beneficial loan terms and features.

Also, salaried applicants must have at least 3 years of working experience while self-employed individuals must showcase a business vintage of 5 years.

These are among the few things you must know before taking a home loan. Avail the tax benefits for substantial savings over the repayment tenor. Refer to lenders who provide not only attractive rates of interest but additional repayment-friendly terms and features as well.

Muhammad Mubeen Hassan

Hi. I am Muhammad Mubeen Hassan. I am SEO Expat and WordPress Websites Developer &  Blogger. 30 years old. I help entrepreneurs become go-to in their industry. And, I like helping the next one in line. You can follow my journey on my blog, for list Click Here If you need any post so you can email me on my this Email: mubeenh782@gmail.com  

Click to comment

Trending

Exit mobile version