Income Tax News: Although a housing loan can help you buy a house for yourself, it can also be an expensive undertaking. However, you can save money each year because to the many tax benefits that come with this kind of financing.
Determining Deductible Amount
Union Finance Minister Nirmala Sitharaman suggested in the budget speech that the deadline for claiming additional deductions for house loan interest payments be extended to March 31, 2024. This comes after the deadline was extended by the administration in the previous budget to March 31, 2022. All home loans that have been granted up until that point will be extended through March 31, 2024.
Tax Benefits on Home Loan (FY 2023-24)
| Income Tax Act | Maximum Deductible Amount |
| Section 24 | Rs.2 lakh per annum |
| Section 80C | Rs.1.5 lakh per annum |
| Section 80EE | Rs.50,000 |
New Updates (Union Budget 2023-2024)
- The deadline for claiming an extra deduction for interest paid on a loan of Rs. 1.5 lakh for the purpose of buying an affordable home has been extended till March 31, 2022.
- An additional year has been added to the eligibility term for the tax break for affordable housing projects. The revised cutoff date is March 31, 2023.
- To encourage the availability of affordable rental housing for migrant workers, a new tax exemption was proposed for the Affordable Rental Housing Projects that have been notified.
- The Pradhan Mantri Awas Yojana (PMAY) has been allocated Rs. 48,000 crore, which is the sole noteworthy development despite the fact that there were no significant modifications to the deductions under house loans.
Interest on a Home Loan Deduction
You are able to apply for a home loan for the exclusive purpose of building or buying a home. Your home loan consists of two payments: principal and interest; however, building your home must be completed within five years of obtaining the loan. Under Section 24, you are eligible to deduct up to Rs. 2 lakh from your income under your interest category.
For self-occupied homes, the maximum interest deduction is Rs. 2 lakh. From 2018 till the present, this regulation has been in force. Nevertheless, there is no cap on the amount of interest you can obtain if your property is rented out. The most that may be claimed as total loss under the “House Property” heading is just Rs 2 lakh. You are eligible to claim this deduction starting in the year that the house’s construction is completed.
Advantages of Home Loans under Section 80C- Principal Deductions
Section 80C addresses the deductions for principal amounts:
- You can deduct up to Rs. 1.5 lakh from taxable income on principal repayment each year for both self-occupied and rented properties.
- It might include registration fees and stamp duties. It can only be claimed once, though.
- You must first finish building the property in order to claim it.
- To be eligible for this deduction, you must not sell your home within five years after moving in.
- Any claimed deduction will be reversed in the year of sale if you sell your home within five years of taking possession. Additionally, this sum will be added to your sales revenue for the year.
How Can Home Loan Tax Benefits Be Reclaimed?
- First, figure out how much of a tax deduction you may claim.
- Verify that you are the co-borrower of the loan or that the residence is in your name.
- To modify the tax deductible at source, provide your employer your home loan interest certificate.
- You would have to file the tax return on your own if you didn’t complete the previous step.
- You do not need to turn in these documents somewhere if you work for yourself. Simply keep them close at hand in case the IT staff has any more questions.
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