Owning a home is a beautiful feeling that everyone wants to feel, and with the help of a home loan, one is able to make this dream a reality. However, do you know you could avail of tax benefits on your Bandhan bank Home Loan? The Indian government offers a number of tax benefits for home loan borrowers as per the Income Tax Act of 1961. These advantages help you better manage your financial flow while also lowering your tax liability in the future. Knowing all of the home loan tax benefits is crucial before submitting a LIC home loan application or any other lender since doing so can enable you to significantly reduce your tax obligations.
Both principal and interest payments are part of a home loan, as you all know. These two groups are both eligible for tax deductions. In contrast to the interesting part, which may be deducted under Section 24(b) of the Income Tax Act of 1961, the principal repayment of a home loan is deductible under Section 80C.
Let’s explore the sections under which you can claim benefits:
Repayment of the Principal Amount for Home Loan Tax Benefits under Section 80C: Each year, you are permitted to deduct a maximum of Rs 1,50,000 in principal payments from your taxable income, irrespective of the fact that you have self-occupied and rental properties. Registration fees and paid stamp duty are also included. However, you can only be claimed once.
- In order to claim property, it must be entirely built.
- If you sell your house within five years of ownership, you cannot claim this deduction.
- If you sell your house within five years of purchasing it, any claimed deductions will be reversed in the sale year. Additionally, you will need to include this amount in your income for the year in which the house is sold.
Tax deduction on Interest Paid for Property that is under construction: If you have purchased the property and it happens to be under construction, and you are paying the EMIs, you have a right to claim interest on your Bandhan bank Home Loan as a deduction after the construction of your property gets completed.
- Both pre-construction period interest and post-construction period interest may be written off under the Income Tax Act of 1961.
- Starting with the year the building is finished, interest related to the pre-construction period may be deducted in five equal annual instalments.
Section 80EE Home Loan Tax Benefits: Additional Deduction: First-time buyers are eligible for an income tax benefit on interest under Section 80EE in the following circumstances: This deduction will only be granted if the cost of the property purchased is under Rs. 50 lakhs, and the loan amount is under Rs. 35 lakhs. The Bandhan bank Home Loan must be approved between April 1, 2016, and March 31, 2017. The benefit of this deduction would be available as long as the LIC home loan is still being paid. This deduction would be available starting with the 2016–17 fiscal year.
Therefore, the total deduction for interest that a taxpayer may claim under Section 24(b) is equal to 1/5 of the interest related to the pre-construction period plus the interest related to the post-construction period.
Interest on Home Loans ((First Time Buyers): Home Loan Tax Benefits under Section 80 EEA: You may additionally deduct up to an additional Rs. 1.5 lakh for the interest on your home loan. The following conditions must be satisfied in order for you to be eligible for the Section 80EE home loan tax benefit:
- You must obtain a Bandhan bank Home Loan from a financial institution or housing financing firm if you wish to purchase a residential home.
- The LIC home loan must be authorised between April 1, 2019, and March 31, 2022.
- The house property’s stamp duty value should not be more than Rs. 45 lakhs.
- Individual taxpayers shouldn’t be able to use the current Section 80EE to deduct expenses.
- The taxpayer ought to be a first-time home buyer. The taxpayer should not be the owner of any residential property at the time of loan sanction.
- If you and your spouse jointly own a piece of property and both of you make Bandhan bank Home Loan payments, you can both claim the deduction.
- Both residents and non-residents may benefit under Section 80 EEA.
The clause does not state whether the residential property must be used for self-occupation in order to qualify for the deduction. This indicates that a deduction may be claimed under this clause even without holding possession.
Benefits
According to existing regulations, tax benefits on LIC home loan are possible on interest that is due. Under the Income Tax Act of 1961, the entire amount of paid interest may be deducted. In the 2019 Union Budget, the government increased the incentives for buying real estate. Previously, only one property was considered to be self-occupied, and any additional property was assumed to be rented out. This used to result in the calculation and taxation of notional rent as income. But as a result of the change, even a second property can now be regarded as a self-occupied property.
Stamp duty and registration costs are also eligible for a deduction under Section 80C, but only up to a total of Rs 1.5 lakh. However, it can be educated in the year these costs are incurred.
How Do Tax Benefits On A Home Loan Get Calculated?
The simplest approach to calculate your tax benefits on a home loan is to use an online calculator. When you enter the details of your home loan details, a comprehensive tabulation will appear. The details you want are: Loan Amount, Loan Start Date, Interest Rate, Gross Annual Income or Purposes of Section 80C or Section 80D
Conclusion
Even while there are costs associated with a home loan, using it effectively can greatly reduce your financial burden and allow you to maximise your tax savings. Other than home loans, there are numerous other ways to lower your tax bill while saving money which will eventually increase your overall net worth.
