The Indian real estate industry is growing at a fast pace. The price of housing is also increasing while keeping up with the industry. This has compelled a large number of home buyers to opt for home loans to purchase a residential property. In order to lower their tax burden, the Government of India has introduced several home loan tax benefits.
What are the tax benefits on home loans?
As per the Income Tax Department of India, homebuyers can claim housing loan tax benefits
on the principal and interest component of their home loan EMIs. The tax heads under which borrowers can avail such tax benefits are –
Under this tax head, borrowers can claim tax deductions up to Rs.2 lakh on the interest component of their annual home loan repayments.
According to Section 80C, homebuyers can avail tax benefits of up to a maximum of Rs.1.5 lakh on the principal component of their home loan EMIs.
As per Section 80EEA, first-time homebuyers can claim tax deductions on the interest component of their home loan repayments of up to Rs.1.5 lakh. Such deductions can be claimed over the existing exemptions from Section 24b of the Income Tax Act 1961.
As per the Union Budget 2020, the above-discussed tax exemptions are not applicable. However, taxpayers can opt to remain in the existing tax reform for FY 20-21 and avail all these tax benefits on home loans.