Many government and private banks in the country are offering home loans at interest rates of 6.65 to 6.70% as on March 31. Banks claim that this is the lowest interest rate in 10 years. This means you can fulfill your dream home by paying less EMI. Not only this, you can also get an income tax concession of Rs 5 lakh after taking out a home loan. It will save you. Tell us how you can get a tax-deductible benefit of Rs five lakh.
1.5 lakhs exemption under Section 80C
Home loan EMI has two parts. The first is principal payments and the second is interest payments. You can be exempt under Section 80C of the Income Tax when paying principal. You can get a tax rebate of up to Rs 1.5 lakh on the home loan.
SBI, ICICI, Kotak Mahindra, HDFC’s latest interest rates
2 lakh tax rebate on interest payments
You can get a tax deduction when paying home loan interest. Home loan interest payments are tax deductible under Section 24. You can take a discount of up to a maximum of Rs 2 lakh in any one financial year. There is no benefit from paying interest of two lakh rupees. If you have two homes and the parents live in a second home, there is the benefit of being exempt under Section 24 on the home loan interest of the second home.
Separate discount on affordable home
If you buy an affordable class home, you can get an additional tax discount on home loan interest payments. This exemption may be obtained under Section 80 EEA. The maximum amount for this is Rs 1.5 lakh. This exemption is different from the exemption of Rs 2 lakh under section 24. This way, if a buyer is buying a home under the Affordable Housing category, he can get a tax discount of up to Rs 3.5 lakh.
Here are some conditions for taking a discount on an affordable home
- Home loans should be taken from financial institutions such as banks or NBFCs
- The home loan must be taken from 1 April 2019 to 31 March 2021
- The stamp duty for buying a house should not exceed Rs 45 lakh.
- The home should not already be in the name of the borrower
- Tax deductions may not be eligible for claim under Section 80 EE
Take advantage of the Pradhan Mantri Awas project
Under the Pradhan Mantri Awas Scheme, a loan of Rs 2.67 per month is being offered to buy or build the first house. An application can be made by the end of this month to avail the facility.
Exemption under Section 80 EE
The concession was reintroduced in fiscal year 2016-17 for people who buy homes for the first time. In fiscal year 2016-17, taxpayers who take out a home loan are granted additional tax deduction up to Rs 50,000 under Section 80 EE. This exemption is Rs 2 lakh available under Section 24. However, this discount is only available to first-time buyers. This way, if all the concessions related to home loan are merged, you can get a discount of up to a maximum of Rs 5 lakh.
