Income Tax News: The complex nature of tax benefits are important to know as taxpayers prepare to file their Income Tax Returns (ITRs) for the fiscal year 2023–2024, particularly for homeowners. Individuals can deduct up to Rs 2 lakhs in house loan interest under Section 24 of the Income Tax Act. The payout might be significantly reduced if certain requirements aren’t met, potentially costing taxpayers up to Rs 1,70,000. To make sure you get the most out of your tax savings, let’s go into the details.
Guidelines for Claiming Rs 2 Lakh Benefit:
- Capital Borrowed After April 1, 1999: The capital for the house loan must have been borrowed on or after April 1, 1999, in order to be eligible for the entire Rs 2 lakh deduction. Prior to this date, loans might not be qualified for the full benefit.
- Purpose of Borrowing: The funds that were borrowed had to be used to buy or build real estate. This indicates that using the loan amount for things like renovating, repairing, or rebuilding an existing property is not advised.
- Completion Within 5 Years: Within five years of the end of the fiscal year in which the money was borrowed, the property must be acquired or constructed. If this deadline is not met, the tax advantage may be lessened.
- Certification by Lender: The loan provider must attest that the interest rate is in line with the funds used for the purchase or building of the residence. The deduction is also available for refinancing a previous loan taken out for the same reason.
Reduction to Rs 30,000 Limit
The maximum deduction for house loan interest might be lowered from Rs 2 lakh to merely Rs 30,000 if any of the above specified requirements are not satisfied. In order to prevent this significant loss of tax advantage, taxpayers must make sure that all standards are followed.
ITR Filing Deadlines
The deadline for submitting income tax returns for the fiscal year 2023–24 (assessment year 2024–25) is July 31, 2024.
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