{"id":29739,"date":"2020-03-22T00:00:25","date_gmt":"2020-03-21T18:30:25","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=29739"},"modified":"2023-07-10T20:51:15","modified_gmt":"2023-07-10T15:21:15","slug":"tax-benefit-on-home-loans-as-per-budget-2020","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/tax-benefit-on-home-loans-as-per-budget-2020\/","title":{"rendered":"Tax Benefit on Home Loans as per Budget 2020"},"content":{"rendered":"

A home loan can help an individual in saving tax as per the provisions provided under the Income Tax Act, 1961. After the announcement of the Budget 2020 by our Finance Minister, Ms Nirmala Sitharaman, Tax Benefit on Home Loans<\/strong> remain unaffected. While on the other hand, the timeline for availing loans for affordable housing has been extended further for a year, i.e. till 31 March 2021. Even though a housing loan can help an individual in getting a house of his own, but it can also turn out to an expensive affair at the same time. However, the tax Benefit on Home Loans<\/strong> various tax benefits that come within the purview of such a loan helps the individual in saving a good amount of money every year. In this blog, we would be dealing with the various benefits available and annexed with the concept of<\/strong> home loans<\/strong>.<\/p>\n\n\n\n

Tax Benefits on\nHome Loan for the Financial Year 2020-2021<\/strong><\/h2>\n\n\n\n

The following table showcased the\ntax benefits provided under the corresponding sections of the Income Tax Act, 1961<\/a> –<\/p>\n\n\n\n

\n Sections of the Income Tax Act, 1961<\/strong>\n <\/td>\n Maximum Deductible Amount<\/strong>\n <\/td><\/tr>
\n Section\n 24\n <\/td>\n Rs 2 lakh is allowed as a deduction in case of the\n self-occupied houseNo limit is prescribed for the let-out property<\/a>\n \n <\/td><\/tr>
\n Section\n 80C\n <\/td>\n Rs 1.5\n lakh is allowed as a deduction from the Principal amount including stamp duty\n and registration fee\n <\/td><\/tr>
\n Section\n 80EE\n <\/td>\n Rs.50,000\n Additional interest, applicable only in the case of first-time buyers\n <\/td><\/tr>
\n Section\n 80EEA\n <\/td>\n Rs. 1,\n 50,000 over\n and above the tax deduction provided under Section 24 of Rs. 2, 00,000 and\n under Section 80C of Rs. 1, 50,000.<\/strong><\/strong>\n The Loan must be sanctioned between 1 April 2019 to 31\n March 2020 from any financial institution<\/strong>\n <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Tax Benefits on Home Loan provided under Section 24<\/h3>\n\n\n\n

Following listed are the yearly deductions\nconcerning the interest paid by an individual on his or her property loan. The related\ndetails are as follow –<\/p>\n\n\n\n

    \n
  1. If the property owned\nby an individual is a self-occupied one, then he or she can claim a maximum\ndeduction of Rs 2 lakh.<\/li>\n\n\n\n
  2. If in case the\nindividual has let out his or her property on rent, then he or she can claim\nany amount paid by him or her as interest. There is no prescribed limit.<\/li>\n\n\n\n
  3. If an individual\nis both a co-borrower and co-owner of the concerned house, then he or she can\nclaim up to the maximum deductible amount provided for each under this section.<\/li>\n\n\n\n
  4. The deduction of\nRs 2 lakh is applicable only if an individual complete the property (for\nconstruction) within a period of five years (Earlier the limit was three years,\nbut now it has increased to five years from the Financial Year 2016-2017\nonwards). Further, if the construction of the concerned property is not completed\nwithin this period, then he or she can claim deduction only up to Rs.30, 000.<\/li>\n\n\n\n
  5. If in case the\nproperty is given out on rent, then the individual can claim any amount\nactually spent as an interest, irrespective of the fact it is completed or not.<\/li>\n<\/ol>\n\n\n\n

    Further, it is significant to note that the tax\ndeduction of Interest on Home Loan provided under Section 24 is deductible only\non payable basis<\/a>, i.e. on an accrual basis. Hence, the deduction allowed under\nSection 24 of the Income Tax Act, 1961 must be claimed on a yearly basis, even\nif in case no payment has been made throughout the year as compared to Section\n80C which allows only for a deduction on payment basis.<\/p>\n\n\n\n

    Tax Benefits on Home Loan provided under\nSection 80C <\/h3>\n\n\n\n

    Section 80C deals with the principal amount deductions –<\/em><\/p>\n\n\n\n

      \n
    1. For both the self-occupied and let-out properties, a taxpayer can claim up to Rs 1.5 lakh as a deduction every year.<\/li>\n\n\n\n
    2. A taxpayer is also required to first to complete the construction of the concerned property, and only then he becomes eligible to claim the deduction.<\/li>\n\n\n\n
    3. In order to claim the deduction provided under section 80C, the taxpayer should not sell his or her house within a period of five years after possessing it.<\/li>\n\n\n\n
    4. If in case the concerned taxpayer sells his or her house within a period of five years after possession, any deduction claimed earlier will be reversed in the year in which he or she sells the house. Further, this amount will also be added to his income for the year of sale.<\/li>\n\n\n\n
    5. If in case the taxpayer is both a co-borrower and co-owner, then he can claim each up to Rs. 1.5 lakh as a principal deduction.<\/li>\n\n\n\n
    6. Lastly, the individual taxpayer is also eligible to claim the stamp duties and registration fees paid regarding his or her property under this section.<\/li>\n<\/ol>\n\n\n\n

      More on Tax:<\/b> Salaried? You need to file Income Tax Return!<\/a><\/mark>.<\/p>\n\n\n\n

      Tax Benefits on Home Loan provided under Section 80EE<\/h2>\n\n\n\n

      If\nan individual is buying a house for the first time, then he or she becomes eligible\nto claim the following interest deduction also along with the benefits already\nmentioned under Sections 24 and 80C –<\/p>\n\n\n\n

        \n
      1. The concerned individual must have taken the home loan between the period starting from 1 April 2016 and ending on 31 March 2017.<\/em><\/li>\n\n\n\n
      2. The concerned property must be of value less than Rs 50 lakh.<\/em><\/li>\n\n\n\n
      3. The amount of the home loan taken must be less than Rs 35 lakh.<\/em><\/li>\n\n\n\n
      4. Further, an individual can claim an additional interest of an amount up to Rs.50,000 every year till the time he or she repays the loan<\/em><\/li>\n<\/ol>\n\n\n\n

        Tax Benefits on Home Loan provided under Section 80EEA<\/h2>\n\n\n\n

        The maximum tax\ndeduction allowed under the newly made section, i.e. section 80EEA is\nRs. 1, 50,000.<\/strong>  Further,\nthis incentive would be over and above the tax deduction provided under Section\n24 of Rs. 2, 00,000 and under Section 80C of Rs. 1, 50,000. Following\nlisted are the conditions for availing this deduction –<\/strong><\/strong><\/p>\n\n\n\n

        1. The Loan must be sanctioned between 1 April 2019 to 31 March 2020 from any financial institution \/HFC<\/strong><\/li>
        2. Stamp Duty Value of the House Property (HP) must not exceed Rs. 45 Lakh<\/strong><\/li>
        3. The taxpayer must not own any residential House Property on the date of sanction of the loan, i.e. he must be a 1st-time buyer<\/strong><\/li>
        4. In case the deduction provided under Section 80EEA is allowed, then no further deduction is allowed in any other section<\/strong><\/li>
        5. This deduction is available only to the individual and not for HUF, AOP etc<\/strong><\/li>
        6. The deduction of Rs.1.50 Lakh is allowed over and above Rs 2 Lakh under section 24, hence, total Rs. 3.50 Lakh is allowed as deduction.<\/strong><\/li>
        7. The Carpet area of a House Property must not exceed 60 sq mtr (645 sq ft) in case of metropolitan cities including Delhi NCR and  carpet area must not exceed 90 sq mtr (968 sq ft) in case of any other cities<\/strong><\/li>
        8. if in case a person jointly owns a House Property with his or her spouse and they both are paying the loan instalments, then both of them are eligible to claim this deduction<\/strong><\/li>
        9. The deduction provided under Section 80EEA is available from the Financial Year 2019-2020 onwards (Assessment Year 2020-21)<\/strong><\/li><\/ol><\/b><\/div>\n\n\n\n

          Deduction Regarding Joint Home Loan<\/h2>\n\n\n\n

          If in case the housing loan is\navailed by two or more persons, then, in this case, each of them is qualified\nto claim a deduction up to Rs 2 lakh each on the interest paid. Further, tax\ncan be deducted easily on the principal paid as well for an amount up to Rs 1.5\nlakhs each. However, it is significant to note that all the applicants must\nalso be the co-owners of the property in order to claim this deduction. Hence,\na joint home loan can provide better and greater tax benefits.<\/p>\n\n\n\n

          Home Loan Tax Benefits of Owning a\nSecond Property<\/h3>\n\n\n\n

          As per the prevailing\nprovisions, if a taxpayer has more than one self-occupied property, then, in\nthis case, only one of them will be considered as self-occupied property. For\nthe other property, he or she will have to pay tax based on notional rent.\nFurther, the taxpayer is free to choose either of his properties as the\nself-occupied one to maximize tax benefits.<\/p>\n\n\n\n

          According to the finance\nbudget announced in the year 2019, it was declared that the second self-occupied\nhome could also be considered as a self-occupied one, instead of it being\nconsidered to be let out on rent. This will result in the prevention of paying\ntax on the basis of notional rent, and will also help the owner in saving\nmoney. Lastly, it will also help the taxpayer in claiming tax deductions for\nthe second property as well.<\/p>\n\n\n\n

          \"Financial<\/a><\/figure>\n\n\n\n

          How to Claim Tax Benefit on Home Loans?<\/h2>\n\n\n\n

          A taxpayer can easily claim tax benefits on the take a home loan by following a simple process. Listed below are the steps required for claiming tax deduction – <\/p>\n\n\n\n

          Step 1<\/strong> – First and foremost step is to calculate the tax deduction to be claimed.<\/p>\n\n\n\n

          Step 2 <\/strong>– In the next step, the taxpayer is required to make sure that the house is in his or her name, or he or she is the co-borrower of the loan.<\/p>\n\n\n\n

          Step 3<\/strong>– Now, the taxpayer is required to submit the home loan interest certificate to his or her employer to adjust the TDS (tax-deductible at source).<\/p>\n\n\n\n

          Step 4<\/strong> – If in case the taxpayer is unable to perform the above-mentioned step, then he or she would have to file the tax return on their own.<\/p>\n\n\n\n

          Step 5<\/strong> – If in case the concerned taxpayer is self-employed, then he or she is not required to submit the above-mentioned documents anywhere. But, is just required to keep them handy if in case the Income Tax department raises queries in the future.<\/p>\n\n\n\n

          How to Calculate Tax Benefit on Home Loans?<\/h2>\n\n\n\n

          The easiest way of calculating tax benefits on a home loan is by using an online calculator. The concerned taxpayer is required to simply enter his or her home loan details and then click on calculate option and a detailed tabulation will come up. The details the concerned taxpayer will generally need are –<\/p>\n\n\n\n

            \n
          1. Loan Amount<\/em><\/strong><\/li>\n\n\n\n
          2. Tenure<\/em><\/strong><\/li>\n\n\n\n
          3. Interest Rate<\/em><\/strong><\/li>\n\n\n\n
          4. Starting Date of the Loan<\/em><\/strong><\/li>\n\n\n\n
          5. Gross Annual Income<\/em><\/strong><\/li>\n\n\n\n
          6. Existing Deduction Under 80C<\/em><\/strong><\/li>\n<\/ol>\n\n\n\n

            Conclusion<\/h3>\n\n\n\n

            Even though a housing loan can help an individual in getting a house of his own, but it can also turn out to an expensive affair at the same time. But, now after the announcement of the Budget 2020 by our Finance Minister, Ms Nirmala Sitharaman, the timeline for availing loans for affordable housing has been extended further for a year, i.e. till 31 March 2021. Further, various other tax benefits have been provided under section 24, 80C, 80EE, 80EEA of the Income Tax Act, 1961. Also, the tax benefits are also provided to those people who are either acting as a Co-owner or are Owning Second Property. Hence, the Budget 2020 has provided Tax Benefits to every individual, whether he an owner or co-owner or a tenant.<\/p>\n\n\n\n

            Also, Read:<\/b> What are the Income Tax Laws for Startups in India<\/a><\/mark>.<\/p>\n","protected":false},"excerpt":{"rendered":"

            A home loan can help an individual in saving tax as per the provisions provided under the Income Tax Act, 1961. After the announcement of the Budget 2020 by our Finance Minister, Ms Nirmala Sitharaman, Tax Benefit on Home Loans remain unaffected. While on the other hand, the timeline for availing loans for affordable housing […]<\/p>\n","protected":false},"author":61,"featured_media":29743,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[5,2435],"tags":[],"acf":{"service_id":"50"},"yoast_head":"\nFM Introduced Tax Benefit on Home Loans in Budget 2020<\/title>\n<meta name=\"description\" content=\"Announcement of the Budget 2020 by our Finance Minister, Ms Nirmala Sitharaman, the Tax Benefit on Home Loans remain unaffected. Taxation\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/tax-benefit-on-home-loans-as-per-budget-2020\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FM Introduced Tax Benefit on Home Loans in Budget 2020\" \/>\n<meta property=\"og:description\" content=\"Announcement of the Budget 2020 by our Finance Minister, Ms Nirmala Sitharaman, the Tax Benefit on Home Loans remain unaffected. Taxation\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/tax-benefit-on-home-loans-as-per-budget-2020\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2020-03-21T18:30:25+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-07-10T15:21:15+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/03\/Tax-Benefit-on-Home-Loans-as-per-Budget-2020-Banner.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Monisha Chaudhary","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2022\/04\/Monisha-Chaudhary-150x150-1.jpg","authorDescription":"Monisha Chaudhary is a distinguished partner at Enterslice with 10+ years of relevant industry experience in company incorporation, fintech, regulatory compliance, insurtech consulting, and M&A. Her creative thought process pushes her to draft excellent writeups. Besides effortlessly tackling business challenges, she invests her free time in writing blogs and articles.","postViews":438,"readingTime":7,"nextPost":{"id":29570,"slug":"clarifications-issued-by-cbdt-in-the-form-of-faqs-on-vivad-se-vishwas-scheme-2020"},"prevPost":{"id":29734,"slug":"corporate-social-responsibility-mca-proposed-amendment-rules-2020"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/03\/Tax-Benefit-on-Home-Loans-as-per-Budget-2020-Banner.jpg","postTerms":"Latest News","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/29739"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=29739"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/29739\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/29743"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=29739"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=29739"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=29739"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}