What are the Income Tax deductions under Home Loan?

There are many sections under Income Tax that can give Income Tax deductions up to Rs 5 lakh

Home Loan Tax Benefit 2021

Housing Loan Interest Deduction 2021
➤ Under Section 80C, you can claim a deduction up to ₹ 1.50 Lakh for the principal repayment done in the financial year.

➤Under Section 24B, you can claim a deduction for up to ₹ 2 Lakh for the accrual and payment of interest on the home loan.

➤Under Section 80EEA, you can claim a deduction for up to ₹ 1.50 Lakh for the interest payment of a home loan availed during the financial year.

➤Under Section 80EE, you can claim an additional deduction of up to ₹ 50,000 for the interest payment of the home loan, if you have availed home loan for an amount less than ₹ 35 Lakh and the value of the property is within ₹ 25Lakh.

➤In the case of a joint home loan, each borrower can claim a deduction of principal repayment (section 80C) and interest payment (section 24b) if they are also the co-owners of the property

Deduction Under Section 80C

The benefits from income tax under section 80C for the first-time homebuyer are up to Rs 1.5 lakh. This benefit of tax can be claimed under the home loan stamp duty as well as home loan principal categories. There are certain conditions to this claim of tax benefit such, as the person availing of the home loan is bound to keep the property for at least five years from the date of possession.

Deduction Under Section 24B

The tax exemption for the home buyer as per section 24 of the income tax act would be an exemption of up to Rs 2 lakh. This exemption would be under the home loan interest category. However, there is a condition on such exemption and that is a family member or even taxpayer himself must be residing in the property for which the loan is taken.

Deduction Under Section 80EEA

Section 80EEA also offers an income tax advantage for first-time homebuyers of up to Rs 1.5 lakh. However, the condition over here is that the stamp duty value of the property, being residential, should be up to Rs 45 lakh only. And the tenure for the approval should be in the time frame of April 1, 2019, to March 31, 2022. While claiming under section 80EEA then no claim should be made under income tax section 80EE

For example, let’s say a person buys a house for Rs 50 lakh and taking Rs 40 lakh as a loan, i.e., an 80 percent loan, with 7 percent interest for 20 years tenure. The EMI for such a loan would be Rs 31,000 and the total amount paid in the first year would be around Rs 3,72,000.

The claim of Rs 95,000 can be taken under 80C, while the Rs 55,000 (from the Rs 95,000) can be taken for stamp duty payments, and is only valid for the first year. The annual earning is taken at Rs 15 lakh as of now and Rs 2,00,000 would be allowed under section 24.

Under section 80EEA the individual can also claim Rs 77,000 interest amount.

2021-09-10: Kotak Mahindra Bank Cuts Home Loan Interest Rate

Kotak Mahindra Bank has reduced the home loan interest rate by 15 basis points (bps), ahead of the festive season. Currently, the minimum rate of interest is 6.50%, the special rate is applicable from 10 September 2021 to November 8, 2021.

2021-09-01: Punjab National Bank introduces Festive Bonanza offer

Punjab National Bank (PNB) has waived off processing fees and documentation charges on a Personal loan, Home loan, Gold loan, and Vehicle loan. The lender is offering a home loan at 6.80%, a personal loan at 8.95%

Best Offers on Home Loan

Bank/NBFCs Rate* EMI Per Lakh*
SBI 6.70% ₹ 645
HDFC 6.75% ₹ 649
ICICI Bank 6.75% ₹ 649

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