Home Loan can help you save on income Tax.
We all know that home loan turn out as a burden when we plan to invest in property.Indian Income Tax Regulation allows certain tax benefit while repayment of principal and interest portion of home loan EMI .
Section 80C: Deduction for principal repayment on home loan
Under this section, a home loan borrower can avail deduction of INR. 1,50,000, in a financial year, from his / her taxable income for payment towards home loan principal repayment. The deduction can also be availed for registration fees, stamp duty and any other specified payment for purchase/construction of residential house property. The maximum deduction that can be availed in a financial year is INR. 1,50,000.
Section 24: Deduction for interest repayment on home loan
Under this section, a home loan borrower can avail a deduction from taxable income for interest paid on the home loan. The deduction amount in a financial year can be the actual interest paid or Rs. 2,00,000, whichever is lower. The house should have been acquired or construction completed within five years from the end of the financial year in which the home loan was taken.
For interest paid for the period before the house acquisition or completion of construction, the deduction can be availed separately after the acquisition of the house or completion of construction. This deduction can be availed in equal installments (20% in each year) over five financial years.