Benefits under section 24(b) and 80C of Income Tax Act against Housing Loan and Its Limit.

There are no changes proposed in respect of deduction available towards principal repayment & interest payment u/s 24(b) or U/s 80C of the Income Tax Act-1961. For the mass benefit the principal amount of House Loan Repayment & interest thereon as under:

Interest payable on Home loan:

• U/s 24(b) of the Income Tax Act-1961, deduction up to Rs. 150,000/- is admissible against the interest payable on the loan availed for purchase / construction of the self occupied house property.[However, the acquisition or construction of the house property should be completed within 3 years from the end of financial year in which home loan was taken; otherwise, the deduction would be restricted to Rs. 30,000/-]
• In respect of loan taken prior to 01.04.1999, the deduction can’t exceed Rs. 30,000/-.
• Pre-construction period Interest [Loan taken against/for under construction property]: The interest paid during the period the house property is under construction is not deductible in the year of payment. Interest in respect of pre-construction period is deductible in five equal annual installments commencing from the previous year in which the house is constructed/acquired. For this purpose “pre-construction period” means the period commencing on the date of borrowing and ending on March 31 immediately prior to the date of completion of construction /acquisition.
• In respect of self occupied house property, it may be noted that for purchase / construction, interest deduction is admissible up to Rs. 1.50 Lacs whereas there is a ceiling of Rs. 30,000/- only in respect of loan taken for Repairs/ Renewal or Reconstruction.

Principal repayment of the home loan:
In respect of principal repayment of home loan, deduction is admissible u/s80C. Overall deduction U/s 80C (which also includes deduction towards LIC/ PPF, Tuition fees etc) can’t exceed Rs. 1 Lacs.

Posted in: Home Loan and Tax Benefit,House Rent Allowance,Tax Benefit