The income tax act provides the tax deductions on the interest and the principal component of the home loan beneath various sections and the total tax deductions which a person would take on the home loan of up to Rs 5 lakh.
Tax Deduction on Principal
Beneath the tax deduction of Rs 1.5 lakh of income tax section 80C, a borrower is enabled to claim the deduction on the repayment of the principal home loan. The situation is that the loan must only opt via a financial entity that comes under the compliance of RBI or towards your employer which is central or state government, a public or public sector company, university or co-operative society. The same deduction would not be available till the construction of the house is under process and when you sell the property within 5 years then any exemption provided to you will be added to your income and would be levied with tax.
Tax Deduction on Interest
Rs 2 lakh deduction is being permitted on the interest which is furnished on a home loan under section 24 it is for the individual property and interest is deductible towards the let out property. The same deduction would be availed only when the construction of the house gets completed. The interest furnished in the period of construction phase would claim for 5 installents post to the finish of the construction.
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Upon section 24 another deduction of up to Rs 1.5 lakh on the interest is permitted beneath section 80EEA. This compliance was incorporated in Union Budget 2019 for affordable homes and comes laden with many conditions.
The bank must sanction the loan or even banking institutes, or even the housing finance company between 1 April 2019 and 31 March 2022. And the stamp duty value of the said asset or property must not cross the limit of INR 45 lakh with no additional residential property on the name of the buyer on the sanctioned date. a tax expert commented.
It is nowhere mentioned that the home loan opted on the under-construction property is subjected for the tax deduction under section 80EEA or not “Whenever the law disallows certain conditions, it is specifically mentioned under the concerned section, as is the case with Section 24 and Section 80C. So, deduction under 80EE can be claimed if the property is under construction,” a tax expert commented.
