According to the latest data released by the Government of India, about 5.83 crore IT returns have been filed as on July 31, 2022. The country boasts having around 8 crore taxpayers currently. As the IT Act provides several benefits for credit borrowers, it is important for taxpayers to analyse and claim their permissible tax deductions. One of the common deductions is the home loan tax benefit under Section 80C of the Income Tax Act, 1961.
Housing loan has evolved as an affordable financing option to purchase or construct a residential property. With reputed housing finance companies, one can choose an appropriate property without having to worry about funding.
What are the applicable home loan tax benefits?
When a borrower avails a housing loan, he/she has to repay the same in small EMIs every month over the loan tenor. This EMI or Equated Monthly Instalment comprises portions of both the outstanding principal and payable interest. Section 80C of the Income Tax Act of India, 1961 entitles a borrower to enjoy tax exemption on home loan. It is one of the most popular benefits claimed by taxpayers.
Understanding Section 80C
The section allows borrowers to avail tax deduction on their principal repayment up to a maximum of Rs.1.5 lakh p.a. It is available to all borrowers, irrespective of whoever the home loan provider is. Alongside the principal amount, this benefit is also applicable to the registration fees and stamp duty paid during property acquisition. However, it must be claimed in the same year of paying these charges.
Below are some essential facts to note:
- With this income tax benefit on home loan, borrowers can save a significant amount of their finances every year.
- This exemption is applicable on the following conditions – the house is either ready to move in or its construction must be complete.
- The buyer cannot sell off the house within 5 years of possessing it. Doing so will reverse the tax benefit and get included in the taxable income.
- If one takes a joint home loan with their spouse as the co-owner of the property, both of them will be eligible for claiming tax benefits of home loan under Section 80C individually. That allows them to save more. Note that the co-applicant can be a friend or family member as well, meeting the required eligibility criteria. Borrowers should follow the complete guide to benefits of joint home loans before applying.
Reputed housing finance companies nowadays offer an online income tax calculator. This free-to-use tool is design to help users calculate the approximate tax they are liable to pay and get a precise estimate of their financial outflow.
How to use the tax calculator?
Income tax calculators determine an individual’s tax liability based on the data provided and involves no other manual calculation.
- Select the appropriate financial year of tax assessment.
- Select the correct gender
- Provide annual income, loan interest payable, repaid principal, etc. as required.
The calculator then displays the total income tax benefit. Along with that, it also shows the taxes payable before and after the home loan.
Once borrowers have calculated and the outcomes are feasible, they can approach a reliable loan provider to avail the best home loan available. Prior to that, they must know the tax saving advantages provided by home loans today.
Home purchasing in India has been quite improves with home credits. The credit is accessible broadly and thus is open to countless individuals. The credit comes at reasonable estimating and thus, individuals can buy their own homes absent a lot of monetary strain. Be that as it may, getting bank finance for home buys has become exceptionally simple, in the interim picking the right loan specialist has turned into a touch more troublesome due to the wide accessibility and choices. There are a few home credit suppliers and figuring out the best among all can be a difficult errand for any home credit searcher.
Conclusion
With housing finance companies, individuals can also look for pre-approved offers which ease the loan application process and save more time. Pre-approved offers are available on a range of financial products, including home loans, loans against property, etc. Individuals need to provide just their name and contact number to check their pre-approved offers online instantly.
A home loan is one of the greatest monetary responsibilities that could only be described as epic. The credit measure of a home credit is in every case high and subsequently it accompanies higher EMIs. The residency time of a home credit is likewise the limit of any remaining credits and ranges from 20 to 30 years.
Hence, borrowers can calculate the total amount of home loan tax benefit under Section 80C and then proceed to claim for quick settlement. They may have to provide certain documents like loan statement, etc. After the deduction is claims, the remaining balance will be tax as per the applicable tax slab rates.
