Home Loan Tax Benefits. There are 2 components to home loan repayment: principal and interest. The practice of paying principal and interest is governed by two separate sections of the Income-tax Act, 1961.
Section 80C of the Income-tax Act allows deduction of payments of the principal component and is approved on the basis of actual payments made in the financial year and not on the basis of the amount outstanding in the relevant year. In addition, the exemption under section 80C is subject to a maximum of 1.50.000 / -.
Download Automated Income Tax Master of Form 16 Part A&B for the F.Y.2021-22 which can prepare at a time 50 Employees Form 16 Part A&B
Deductions may be required to pay interest under section 24. Now, Section 24 (b) provides that if the property is purchased or built with a capital loan and such acquisition and construction is completed within 5 years of the end of the financial year in which the original loan was made, you are liable for any interest payable on that capital.
You can request deduction up to a maximum of Rs. 2.00.000 / - and if the property is renovated, repaired or rebuilt with borrowed capital, deduction can be made. Requested. Any interest up to a maximum of Rs. 30,000 / - is payable if the property is self-acquired. There is no maximum deductible for interest payable when renting a property.
Section 24 also provides for deduction of interest for pre-construction period but not for the same year. It is approved from the year the construction is completed. The year the construction is completed in 5 equal installments of interest from the pre-construction period and 4 years thereafter.
Download Automated Income Tax Master of Form 16 Part B for the F.Y.2021-22 which can prepare at a time 50 Employees Form 16 Part B
Also, Section 24 allows deductions on the basis of arrears and not on the basis of actual payments. Therefore, even if no payment is made in a year, deduction may be requested on the basis of arrears of interest.
A new section "Section 80EEA" has now been added which allows the removal of mortgage interest on certain real estate properties. Subject to fulfillment of the following conditions, up to a maximum of Rs. 1.50,000 / -, deduction is allowed in this section for any interest payable on the loan taken by an individual: -
1. The financial institution has approved the loan between April 1, 2019 and March 31, 2022.
2. The value of stamp duty on residential home ownership does not exceed forty-five million rupees;
3. The valuer does not have any residential property on the date of loan approval.
Overall, the appraiser may request deduction of any interest payable on the capital borrowed for the acquisition and construction of real estate, up to a maximum of Rs. 3.50.000 / - (up to 2.00.000 / - in sections 24 and 1.50. 000 / -) Section 80EEA Certain conditions are met). And, Section 80EEA allows interest up to Rs.1.50,000 / - for pre-construction period in the same year in which interest is payable.
Download Automated Income Tax Form 16 Part A&B and Part B for the F.Y.2021-22 which can prepare one by one Form 16
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