With the reduction of lending rates in the market, the housing loan sector has witnessed a massive demand among borrowers in last few years. Further, to encourage intending homebuyers, the Indian Government allows certain tax benefits on housing loans.
However, while availing a home loan online or offline, individuals must know that these benefits come with certain conditions. Hence, comprehensive knowledge about tax benefits is essential before obtaining the credit.
Tax benefits on home loan
After availing home loan online, individuals must pay EMIs, comprising principal and interest components. According to the IT Act, one can enjoy benefits on both these components.
Home loan tax benefits can be availed under the following sections:
Deduction under Section 80C
Under this section, individuals can claim tax exemptions of up to Rs.1.5 lakh every year on principal repayment till the end of the tenor. This may involve stamp duty and registration charges but can be claimed only once.
Deduction under Section 24
Here, individuals can claim a maximum deduction of Rs.2 lakh per year on the interest paid towards home loan. This amount is applicable for the property whose construction is finished within 5 years of availing the loan.
Additionally, individuals availing an online home loan for the first-time can earn additional benefits of Rs.50, 000.
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