According to deductions available u/s Section 80, EEA in Income Tax Act, 1961, a tax benefit is available on the payment of home loan interest. However, this benefit is limited to an amount up to Rs. 1.5 lakh, and an individual can claim the same on occasion of purchasing a house with a stamp value of up to Rs. 45 lakh.
In addition to this, additional exemptions are available above amount of Rs. 2 lakh as per Section 24(b). Furthermore, it is important to consider that individuals obtaining a home loan under the PMAY CLSS scheme will be eligible to file a deduction under Section 80 EEA.
What are the types of tax benefits available on housing loan repayment?
As per the Income Tax Act, home loan tax benefits are available on components of monthly repayment – the principal amount and interest payable. As specified in the Act and under Sections 80C and 24, deductions are available in both repayment components.
1.Section 80C
Under this section, the deduction is available up to Rs. 1.5 lakh on repayment of the principal amount of a home loan. It is important to note that this includes stamp duty and registration charges, and individuals can claim the same once in the same year.
2.Section 24
Under Section 24, the maximum deduction available on repayment of interest amount is up to Rs. 2 lakh. However, the deduction only applies to houses constructed within five years. Moreover, if the same property has construction time of less than five years, then individuals can claim up to Rs. 30,000.
The availability of tax relief mentioned above on the repayment of home loans reduces the financial burden significantly.
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