There are two components to home payment: Principal means principal's payment and repayment of interest. Since there are two separate components to the 2nd payment, the tax benefits on home loans are governed by different sections of the Income-tax Act and are subject to tax exemptions under different sections when filing an income tax return.

 

Home tax benefits

Department approved for discount

Section 24 (b) H.B. Loan Interest Max Rs. 2 Lacks

Section 80C. 1,50,000  principal payment of  H.B. Loan Principal

Section 80EEA pays 1,50,000 H.B. interest

The following are the tax benefits that can be claimed on a home under these categories: -

Category 80C: Tax benefits on home appliances (principal amount)

The amount paid by an individual / HUF as payment of the principal amount of housing is allowed as tax exemption under Section 80C of the Income Tax Act. The maximum tax exemption allowed under Section 80C is Rs 1,50,000.

You may also; Like- Automated One by One Income Tax Form 16 Part B for the F.Y.2020-21 as per new and old tax regime U/s 115 BAC 

Income Tax Form 16

This tax exemption is included in the total exemptions approved under section 80C and include the amount invested in the PPF account, tax-saving fixed deposits, equity-oriented mutual funds, national savings certificates, senior citizen protection scheme, etc.

 

U/s  80C is available on a pay-as-you-go basis regardless of the year of payment. The deposit as G.P.F./ V.P.F.and the registration fee is also allowed as tax exemption under section 80C even if the appraiser has not taken a loan.

 

 

However, the home loan facility under this section for repaying the principal part of the home loan is allowed only after the completion of the construction work and the issuance of the completion certificate. No waiver will be allowed for the principal's payment for the year in which the property was under construction under this section.

You may also; Like- Download &Prepare at a time 50 Employees Form 16 Part B for the F.Y.2020-21 as per new and old tax regime U/s 115 BAC 

Salary Statement

 In addition, if you are planning to purchase an under-construction property, it is priced lower than the completed property, you are also requested to note here that GST is also levied on the under-construction property. However, no service charges are levied on properties on which construction has been completed.  

House property must be purchased or sold within 5 years

Section 80C (5) also states that in case of transfer of property of the house under section 80C, the assessee has sought a tax exemption under section 80C before the expiry of the five-year term of the financial institution owned by him. No discounts and tax benefits can be given. The total amount of total tax deductions already claimed in previous years is the property that was sold this year and the assessee will be liable to pay tax on such national income as the income of the assessee for that year.

You may also; Like- Download & Prepare at a time 100 Employees Form 16 Part B for the F.Y.2020-21 as per new and old tax regime U/s 115 BAC 

Income Tax form 16 Part B

Home Benefit Tax (Amount of Interest)

The home tax benefit can be claimed as a rebate under Section 24 of the newly inserted Section 80EEA (2020 Budget Amendment) to pay interest on homeowners.

 

Section 24: Income tax benefit on interest on purchase/construction of the real estate

Tax benefits on homeowners are allowed to be exempted under Section 24 of the Income Tax Act for payment of interest. Pursuant to Section 24, the amount of interest paid on the interest on the loan taken for the purpose of

 

purchase/construction/repair/renewal/reconstruction of the property will reduce the income from the home property.

You may also; Like- Download & Prepare at a time 50 Employees Form 16 Part A&B for the F.Y.2020-21 as per new and old tax regime U/s 115 BAC 

Income Tax Form 16 Part A&B

The maximum amount of tax exemption allowed under section 24 of a self-occupied property should be a maximum of Rs. 2 lakhs (Increased from 1.5 lakhs in the 2014 budget to 2 lacks) 

 

In case of non-possession of the property for which the mortgage has been taken, the maximum limit has not been fixed in this case and the taxpayer can avail a tax deduction under section 24 of the full amount of interest. 

 

PLEASE NOTE: If a property is not self-occupied by the owner due to the fact that it is due to his job, business or profession elsewhere, he must be in a place not owned by him elsewhere. The amount of tax exemption allowed under section 24 should be Rs 2 Lacks

You may also; Like- Download & Prepare at a time 100 Employees Form 16 Part A&B for the F.Y.2020-21 as per new and old tax regime U/s 115 BAC 

Income Tax form 16 Part A and Part B

It is also important to note that this tax deduction on interest under section 24 is deductible on the basis of payable, i.e. on the basis of withdrawal. Thus, a discount under section 24 can be claimed on an annual basis even though no payment has been made as compared to section 80C allowing a discount only on the basis of payment. 

 

In addition, if the property is not acquired/constructed within the acquired year from the end of the financial year in which the loan was taken, the interest benefit will be reduced from Rs 2 lakh to only Rs 30,000. (The limit has been increased from 3 years to 201 years-1. It has been five years from the financial year). 

Category 80EEA: Income Tax Benefits on Home Interest Interest (First Time Buyers)

Interest rebate can also be claimed under section 80EEA which is more than the rebate and above, Rs 24,000 / - is allowed to be claimed under section 24. Rs 2 lakh and above Rs 1.5 lakh under deduction section 80C is also allowed 

This exemption from Section 80EEA will be applicable only in the following cases: -

1. This discount will be allowed if the stamp duty value of the purchased property is less than Rs. 45 lakh. 

Interest rebate can also be claimed under section 80EEA which is more than the rebate and above, Rs 24,000 / - is allowed to be claimed under section 24. Rs 2 lakh and above Rs 1.5 lakh under deduction section 80C is also allowed 

This exemption from Section 80EEA will be applicable only in the following cases: -

 

1. This discount will be allowed if the stamp duty value of the purchased property is less than Rs. 45 lakh.

2. The note should be approved between 1st April 2019 and 31st March 2021.

Download Automated Income Tax Arrears Relief Calculator U/s89(1) with Form 10E from the F.Y.2000-01 to F.Y.2020-21(Updated Version)

Income Tax Form 10 E