Under the Indian Income Tax Act, 1961, Income tax benefits for the resident Indians based on the principal and interest component of a loan. It may help one get tax benefit, interest repayment (Section 24 ) of Rs. 1,50,000 per year is paid. In addition to this, one also is eligible for getting tax benefits under section 80C on repayment of Rs.1 lakh per year, that further reduces the tax liability by Rs.33,660 per year.
These deductions are available to assesses, who have taken a loan to either buy or build a house, under Section 24(b). However, interest on borrowed capital is deductible up to Rs 1,50,000 if the following conditions are fulfilled:
# Home Loan is borrowed for acquiring or constructing a house on or after April 1, 1999.
# The home buying and construction should be completed within Three years from the end of the financial year in which Home Loan was borrowed.
If the conditions stated above are not fulfilled, then the interest on borrowed capital is deductible up to Rs 30,000 though the following conditions have to be satisfied:
# Home Loan is borrowed before April 1, 1999 for purchase, construction, reconstruction repairs or renewal of a house property.
# Home Loan should be borrowed on or after April 1, 1999 for reconstruction, repairs or renewals of a house property.
# If the Home Loan is borrowed on or after April 1, 1999, but construction is not completed within 3 years from the end of the year, in which capital is borrowed.
In addition to the above, principal repayment of the Home borrowed is eligible for a deduction of up to Rs 1,00,000 under Section 80C from assessment year 2006-07.
Terms and conditions..!
The Terms and conditions for availing Tax benefits on Home Loans are...
# According to the Indian Income Tax Act, tax rebates can only be claimed by the loan applicant.
# Tax deductions can be claimed on housing loan interest payments, subject to an upper limit of Rs 1,50,000 for a financial year.
# An additional Home loan for extension/improvement to the same house and the individual's deductions on the existing loan are less than Rs 1.5 Lakh; he/sh can claim further benefits from the additional loan taken, subject to the upper limit of Rs 1.5 Lakh for a financial year.
# Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be claimed only when the payment is made. If an individual fails to make EMI payments, he cannot claim tax benefits for the same.
These deductions are available to assesses, who have taken a loan to either buy or build a house, under Section 24(b). However, interest on borrowed capital is deductible up to Rs 1,50,000 if the following conditions are fulfilled:
# Home Loan is borrowed for acquiring or constructing a house on or after April 1, 1999.
# The home buying and construction should be completed within Three years from the end of the financial year in which Home Loan was borrowed.
If the conditions stated above are not fulfilled, then the interest on borrowed capital is deductible up to Rs 30,000 though the following conditions have to be satisfied:
# Home Loan is borrowed before April 1, 1999 for purchase, construction, reconstruction repairs or renewal of a house property.
# Home Loan should be borrowed on or after April 1, 1999 for reconstruction, repairs or renewals of a house property.
# If the Home Loan is borrowed on or after April 1, 1999, but construction is not completed within 3 years from the end of the year, in which capital is borrowed.
In addition to the above, principal repayment of the Home borrowed is eligible for a deduction of up to Rs 1,00,000 under Section 80C from assessment year 2006-07.
Terms and conditions..!
The Terms and conditions for availing Tax benefits on Home Loans are...
# According to the Indian Income Tax Act, tax rebates can only be claimed by the loan applicant.
# Tax deductions can be claimed on housing loan interest payments, subject to an upper limit of Rs 1,50,000 for a financial year.
# An additional Home loan for extension/improvement to the same house and the individual's deductions on the existing loan are less than Rs 1.5 Lakh; he/sh can claim further benefits from the additional loan taken, subject to the upper limit of Rs 1.5 Lakh for a financial year.
# Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be claimed only when the payment is made. If an individual fails to make EMI payments, he cannot claim tax benefits for the same.
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