In order to understand the tax benefits on home loans in India, you need to know that there are two sections that fall under the Income Tax Act 1961. These two sections are the 24B and the 80C.
How Things Work
When you pay your EMI every month for the housing loan, it gets divided into two parts. One part goes to the main amount or the principal amount and the other goes to the interest. And for these two separate divisions, you can claim for tax benefits as they are managed by two different sections.
Know 24B
One can expect Rs. 2 lakhs as maximum tax benefits under this section for self-occupied properties only. Apart from this, your property should be complete one within the first five years of the loan. Without this condition, your deductible amount will get lower. Moreover, as per this section of the IT Act, the tax on the interest is not a payment basis; rather payable basis. For a joint home loan, each separate person will be entitled to get the tax benefits.
Know 80C
In this section, the maximum amount you can expect is 1.5 lakh and this deduction includes the stamp duty and registration fees. One thing to keep in mind is that you are applicable to claim the tax benefits on housing loan under this section if you a property. But under construction properties are not included to get the tax benefits.
One must know in detail all the tax-related information as they take a home loan. Make sure you also discuss with your lender about this matter.
