Income Tax deduction and rebate available on Housing Loan

For the FY 2020-21, Salaried individuals, who have no business income, have the option to choose between the old (existing) and new tax regimes u/s 115BAC as per their convenience. There are different types of income allowed as deduction while computing the income chargeable under the old rule. There are different Sections of the Income Tax Act such as section 80( C), 80EE, 80EEA, and section 24 of income tax act which allows owners of the house to claim a deduction of home loan interest on accrual basis, not on actual payment. For more details of benefits under section 24 read: ‘Calculation of income or loss on house property‘ for assessment of income tax.

The repayment principal amount of loan, up to the Rs.150000.00 in a financial year, enables you to get tax rebate up u/s 80 ( c ) of IT Act. Home-owners can claim a deduction of up to Rs 2 lakh on their home loan interest as per section 24(1B) of income tax act. In case of loan availed for the construction of house, the interest deduction can only be claimed, starting in the financial year in which the construction of the property is completed. The other condition is that the purchase or construction must be completed within a period of 5 years, lest interest deduction allowed up to a limit of Rs.30000 only. The period of 5 years is calculated from the end of the financial year in which loan was taken. So, if you have taken a loan for construction of a house during June 2018, the construction of the property should be completed by 31st March 2024.

The joint owners who are also co-borrowers of a self-occupied house property, can also claim a deduction on interest paid on home loan up to Rs.2 lakh each. The each of the joint owners can also separately claim deductions under section 80 C within the overall limits of Rs.1.5 lac on repayment of principal loan amount.However, these deductions are allowed to be claimed in the same proportion as that of ownership share in the property.

In addition to interest deduction of Rs.2 lac under section 24(b), the first time of residential property after April 1, 2019 can claim interest paid rebate of Rs.1.50 lac under Section 80EEA. It means you can save together with Rs.3.5 lac together under 24(b) and 80EEA. The rebate under this section is not available to tax payers who have claimed rebate under section 80EE. Section 80EE was first introduced with effect from the financial year 2013-14 with interest deduction limit of Rs.1 lac. It was reintroduced, effective FY 2016-17 (AY 2017-18) with a deduction up to Rs. 50,000 per year until the loan is repaid.

The appreciation value of house property is high in city/urban areas:

If you think of buying a residential property purely on investment purpose, then it is a good idea to buy residential property in a city/urban area as appreciation on properties faster compared to rural/semi-urban areas and you may get good rent in the urban area if you are not occupying the same.

Continue to read;

INCOME TAX SLABS FOR FY 2024-25: TAX DEDUCTIONS AND REBATES EXPLAINED	KNOW TDS ON CASH DEPOSIT WITHDRAWALS AND OTHER CASH TRANSACTIONS	INCOME TAX DEPARTMENT HAS NOW ROLLED OUT NEW FUNCTIONALITY IN AIS
INCOME TAX DEDUCTION AND REBATE AVAILABLE ON HOUSING LOAN	CALCULATION OF INCOME TAX BENEFIT AVAILABLE ON HOUSE RENT ALLOWANCE	DO YOU KNOW THESE INCOMES ARE FULLY EXEMPT FROM INCOME TAX

[Nearly, 104 amendments are made either by amending/omitting existing sections or by insertion of new sections. In this article, the amendments, which are most relevant to salaried persons, are covered below.]

1	List of employee benefits not included under the head of Salaries for the tax treatment
2	How to calculate tax relief on salary arrears under Section 89(1)?
3	The tax calculation for Concessional or interest-free loans are given by an employer
4	Calculation of Income Tax benefit available on House Rent Allowance
5	Calculation of tax components on the perquisite value of rent-free unfurnished/furnished accommodation/hotel charge
6	Perquisite value of motor car expenses paid/reimbursed by the employer
7	Income Tax treatment in case of provided with medical benefit
8	What is the tax exemption limit for Transport allowance, Conveyance allowance, and Relocation Allowance?
9	Income Tax Benefit on LTA/LTC under section 10(5)
10	Tax benefits for working in a hilly area, tribal area, border area, and disturbed areas
11	Tax benefits for working in a hilly area, tribal area, border area, and disturbed areas
12	Tax benefits on retirement, VRS, and retrenchment of salaried persons
13	What is capital gain and how capital gain tax has arrived?
14	Tax deduction benefits on the standard deduction, entertainment allowance, and employment/professional tax from salary
15	The taxable value of perquisite in respect of “sweat equity shares” or ESOP
16	What are the tax benefits under NPS?
17	Do you know these incomes are fully exempt from Income tax?
18	What happens to your tax liability when you opt for a new tax regime?
19	Do you know the incomes that are exempted from income tax even in the new tax regime?
20	Do you know these incomes are fully exempt from Income tax