The Indian government has always supported and promoted investment in house property by citizens. The union budget 2021 came out on 1st February 2021 and gave good news regarding the tax deduction on housing loans. It extended the benefit of Rs. 1.5 lakh tax deduction on the interest paid on housing loans by one more year. Therefore, now one can avail a deduction of up to Rs. 3.5 lakhs on home loan interest in total among all the relevant sections till 31st March 2022. Let’s get to know more about the tax benefit of home loans and better understand income tax returns.
Relevant Sections Under Income Tax for Home Loan
When an individual takes a home loan, he pays monthly home loan EMIs as repayments with two components- principal amount and interest due. A borrower can enjoy tax benefits individually on each component. The relevant sections for availing deduction are as follows:
Section 80C
Under section 80C, a deduction is allowed for the principal portion of the monthly repayment made for the entire year. The maximum amount of deduction is Rs.1.5 lakhs that can be claimed from your taxable income. It can also include the amount paid towards stamp duty and registration charges, but these can be claimed only once. You can find the best home loan by Standard Chartered with affordable EMIs.
Section 24
A borrower can enjoy a maximum tax deduction of up to Rs. 2 lakhs on the interest component. But this is applicable on a home loan that is taken for the construction of a house. The construction must get completed within five years from the end of the financial year in which the loan was taken. If the construction is not completed within the stipulated period, then the deduction can only be claimed up to Rs. 30000.
Section 80EE
An additional benefit is given to those buying a home for the first time under section 80EE. An extra deduction of Rs. Fifty thousand can be claimed each year on interest payable. However, the home loan must be under or equal to Rs. Thirty-five lakhs and the property on which benefit is being taken must not value more than Rs. 50 lakhs.
Section 80EEA
This was first introduced in the budget 2019 for home buyers, providing an additional deduction of up to Rs.1.5 lakhs. For this, the house’s stamp value should be within 45 lakhs, and the loan should be taken between 1st April 2019 to 31st March 2020. The borrower should not have any other house at the time loan was sanctioned.
Some Other Things Related to Tax Benefit on Home Loan
The deduction available under section 80EEA is over and above the deduction claimable under section 24(b). But the borrower shall not be eligible for claiming benefit under section 80EE.
In the case of a joint home loan, each borrower can claim a deduction of up to Rs. 2 lakhs on interest and Rs.1.5 lakh on the principal amount. The only condition is that the co-borrower must also be co-owner of the property.
Conclusion
In summary, the additional benefit under section 80EEA of Rs. 1.5 lakhs on interest payable have been extended by the government by another year till March 2022. Buying a home loan from Standard chartered can also help you in estimating tax deduction benefits. So, in 2021, a borrower gets more tax benefits and incentives to invest in house property.
