Home Loan Borrowers are provided few of the tax incentives as either tax break or exemption for serving such a large ticket-size loan. After the Union Budget announcement on February 1, 2017, few of the changes were effected, knowing which come in handy for them at the time of making a claim while filing the tax return.
1. Maximum deduction on interest for a home loan set at Rs. 2 lakh from FY 2017-18
Barring taxpayers who deal in real estate, all taxpayers will have a maximum exemption of Rs. 2 lakh for the interest paid on capital borrowed to purchase a home or for any other investment. The earlier provisions allowed such interest paid to be set off against the rental income without any prescribed limit.
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Deductor's Details Sheet
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Individual Salary Structure
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Tax Computed Sheet
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Input Sheet for Arrears Relief
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Arrears Relief Calculation
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Form 16 Part A&B
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2. An exemption can be claimed even when the EMI is missed in a year:
As long as the interest is payable on the housing loan, the taxpayer is allowed a tax advantage in lieu of it as a deduction. The said deduction is allowable also in a condition when the borrower defaults on EMI payment.
Deductions of a maximum Rs. 50,000 allowed as per Section 80EE
The section 80EE has been re-introduced as an aid to homebuyers to provide a deduction to the extent of Rs. 50,000. The tax-relief as per the section is available only to new home buyers who have taken a home loan of not over 35 lakh and whose property values less than or equal to Rs. 50 lakh. Also, the financing of such loan should have been effected in the previous FY i.e. April 1st, 2016 to March 31, 2017.
Tax deductions for any processing charges or pre-payment penalty can be claimed
Also, any amount paid as stamp duty or registration charges can be claimed as a deduction.
Deduction on Principal Amount Repayment u/s 80C:
In the case of property sale in five years time from the date of home loan grant, the repayment benefit realized on principal payment gets reversed. Any deduction claimed shall then be added as income for the year in which property sale gets materialized. The principal amount of the home loan is eligible for deduction u/s 80C to the maximum amount of Rs. 1.5 lakh.
