Income Tax benefits on Investments

Income Tax benefits on Investments

To understand the basic tax benefits of a home loan. We divide the payment strategies into four main components.

  • Tax benefits into major payments.
  • Tax benefits on interest paid.
  • Deductions on pre-construction interest.
  • And Section 80EE income tax benefits. The next chapter will tell all the details.

Tax benefits on basic payments

Under Section 80C of the Income-tax Act, the maximum allowance allowed to repay the principal amount of a home loan is Rs. 1.5 lakh. Deduction under section 80C also includes investments. Such as:

  • Made-in PPF accounts.
  • Equity-oriented mutual funds.
  • Tax-saving fixed deposits.
  • National Savings Certificates, etc. up to a maximum of Rs. 1.5 lakh.

Also, there are stamp duties and registration charges that anyone can claim under the aforesaid section. However, claims can be made in the year in which the payment was made.

However, there is a condition under which this repayment of the principal amount of the home construction loan is allowed. Discounts are possible only after the house has been completed and if it has a certificate of completion. The principal amount paid for any structure/property under construction shall not be part of this section.

Tax benefits on interest paid

Under Section 24 of the Income Tax Act, one can avail of the benefit of deduction on a home loan for providing interest tax benefit. The self-acquired property allows a deduction of Rs 2 lakh for completion within 5 years from the end of the financial year. Otherwise, the maximum limit is Rs. 30,000

The interest on the mortgage loan paid for the let-out property is fully approved in the relevant assessment year where it is claimed.

From the assessment year 2018-19, the loss from the head of home property which will be deducted from the head of other income will be limited n later years.

Read more: Income tax protection tips in India

Deduction on pre-construction interest

You can claim interest on the home loan given before the construction of the property is completed. This is called pre-construction interest. It is approved in 5 equal installments that the construction is completed from the financial year. However, a limit of Rs. 2 lakhs for pre-construction interest will also be applicable in the case of self-acquired property. However, let it be our property in fully approved cases.

Section 80EE income tax benefits

Section 80EE proposes to deduct Rs 35 lakhs. Loans should be granted between April 1, 2016, and March 31, 2017, to claim deductions under this section. This exemption will be granted with interest allowed under section 24 (b) of the Income-tax Act, 1961.

Cutting by individuals under section 80EEA

Under the newly inserted section 80EEA of the Income-tax Act, the government has increased the deduction limit to Rs. This applies to the interest paid on any person’s loan as opposed to 1,50,000 residential properties. As per the policy, a deduction is available only for individual residents and for those properties whose stamp value is less than Rs. 45 lakhs. And also, the loan has to be sanctioned between 1 April 2019 to 31 March 2020 and the person should not have any other residential property on the date of loan approval. After all, the person will not be eligible to claim any discount on U / S 80EE.

Joint Home Loan Deduction

If the home loan is taken jointly, the borrowers are personally entitled to claim a rebate of up to INR 1.5 lakh on interest on each house and up to Rs 2 lakh for principal repayment in the tax return. All of them must be co-owners of the property and this helps in the benefits of large tax claims when they are in the family.

This article is after the submission of IT Filing by me and understood what I missed about Joint Home Loan Deduction.

Piklu Chanda

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