As per the Union Budget 2020, home loan borrowers are now entitled to receive additional home loan tax benefits of up to Rs.1.5 lakh on interest payment. This deduction is available under the Section 80EEA of the ITA.
Besides, borrowers can also enjoy several other options for tax saving on home loan repayment.
Home loan tax benefits
A home loan repayment comprises two major components, interest and principal amount. While servicing a loan, borrowers need to repay both the components to clear off their debts. Nevertheless, they can enjoy tax benefits on their housing loan, thereby reducing their liabilities.
Following are some of the scenarios where home loan borrowers can enjoy tax exemptions.
- Interest payment
Under Sections 24B and 80EE, home loan borrowers are eligible to claim tax benefits on housing loan interest.
- 24B- This provision of Income Tax Act allows borrowers to claim a deduction of up to Rs.2 lakh on interest payable.
- 80EE- First time home loan borrowers can also avail tax exemptions of up to Rs.50,000 on interest payment.
Now, under Section 80EEA, individuals can enjoy a total of up to Rs.1.5 lakh on top of the exemptions under Section 24B.
- Principal payment
Home loan tax benefits are also available on principal repayment of a home loan. Under Section 80C of the ITA, one can claim a tax exemption of up to Rs.1.5 lakh on the principal repayment.
Individuals can also make use of an online home loan tax benefit calculator to get an estimation of how much they can save through the deductions.
Read Also: Know The Tax Benefits Of Home Loan In The Year 2020-21
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