With the increasing rates of property, buying your home is not very easy. So, if you’re planning to buy your home or you’re repaying your on going home loan, there are some income tax benefits related to home loans that you should definitely not miss out!
In this article, we have looked up for some of the most amazing income tax deductions that you can claim against your home loan.
Also, we have put up the home loan interest rates of leading banks and financial institutions of the country for you to determine the lowest interest rates that you can avail while you apply for your home loan.
Competitive Home Loan
Compare the home loan interests from the leading banks and financial institutions from the table below and apply for the home loan that suits you the best.
|NAME||INTEREST RATES||PROCESSING FEES|
|State Bank Of India||7.35% – 7.90% p.a.||Rs.2,000 – Rs.10,000|
|HDFC Ltd.||7.35% – 8.25% p.a||Up to 0.50%|
|ICICI Bank||7.70% – 8.80% p.a.||0.50% to 1%|
|HSBC Bank||7.95% – 8.05% p.a.||Rs.10,000 or 1% of Loan amount|
|UCO Bank||7.85% – 8.10% p.a.||0.50%|
|United Bank Of India||8.00% – 8.15% p.a.||Rs.1000/ or Above|
|Standard Chartered Bank||8.86% – 9.19% p.a||Upto 1.00%|
|Central Bank Of India||6.85% – 7.10% p.a.||1% (or Min. Rs.10,000)|
|Bank Of India||6.85% – 7.75% p.a.||0.25% (Max. Rs.20,000)|
|Axis Bank||7.75% – 8.55% p.a.||Up to 1%|
|IDBI Bank||7.80% – 8.80% p.a.||0.50%|
|Bandhan Bank||8.75% – 11.75% p.a.||1% of Loan Amount|
|LIC Housing Finance Ltd||7.40% p.a. onwards||Rs. 10,000- Rs.15,000 (+Service Tax)|
|Tata Capital||8.50% p.a. onwards||2%|
|Aditya Birla Capital Housing Finance||9.00% – 12.50% p.a.||Upto 1% on loan amount|
|GIC Housing Finance||9.10% – 12.50% p.a.||Min Rs.2500/-|
As on 06th July 2020
Income Tax Benefits
The following sections of the Income Tax Act give you the details of the tax benefits for your home loan:-
Section 80EEA – Additional Interest Benefits for First Time Buyers (2019-2021)
Finance Minister Nirmala Sitharaman had introduced Section 80EEA in the Income Tax Act in the 2019 Union Budget with the aim to give a boost to the centre’s “Housing for all by 2022” programme by offering additional tax benefits to first time buyers of houses.
- Individual taxpayers can claim a deduction of up to Rs. 2 lakh on interests paid for the housing loan.
- An additional deduction of Rs. 1.5 lakh for interest paid on loans taken up between 1st April 2019 and 31st March 2020.
- The stamp value of the property must be within Rs. 45 lakh.
- The individual must be a first-time buyer.
- If an individual is already claiming deductions under Section 80EE, he cannot claim deductions under Section 80EEA.
The period covered was extended up to 31st March 2021 by the Finance Minister in her 2020 Budget speech.
Section 24 – Yearly Deductions
This section of the Income Tax Act deals with the yearly deductions related to the interest paid on a property loan.
- A maximum deduction of Rs. 2 lakh can be claimed for a self-occupied property.
- Any amount that has been paid as interest can be claimed without considering a limit in case of let-out property.
- If the taxpayer is a co-borrower and co-owner at the same time, he is eligible to each claim up to the maximum deductible amount under this section.
- The deduction amount of Rs. 2 lakh can only be claimed if the construction of the property is completed within 5 years. If the construction period exceeds the given time, one can only claim up to Rs. 30,000.
Section 80C – Principal Deduction
The above-mentioned section of the Income Tax Act deals with the principal amount deductions of the property loan.
- One can claim up to Rs. 1.5 lakh every year for both self-occupied and let-out properties.
- The deduction can only be claimed after the completion of the property.
- The property must be held for more than 5 years after possession to claim the deduction.
- If the taxpaying individual is a co-borrower as well as a co-owner, he can each claim up to Rs. 1.5 lakh as a principal deduction.
- The stamp duty and registration fees paid for the property can also be claimed under this section.
Section 80EE – Additional Interest Benefits For First Time Buyers (2016-2017)
If an individual is buying a house for the first time, he can avail the following interest deduction in addition to the benefits mentioned in the above sections of the Act.
- The loan should have been taken between 1st April 2016 and 31st March 2017.
- The value of the property must be less than Rs. 50 lakh.
- The amount of home loan taken must be less than Rs. 35 lakh.
- An additional interest amount of up to Rs. 50,000 can be claimed every year till the loan is repaid.
Joint Home Loan Deduction
If the home loan is availed by two or more individuals, each of them is eligible to claim a deduction of up to Rs. 1.5 lakh on the principal amount. An additional deduction of Rs. 2 lakh can also be claimed on the interest payment. However, it is important that all the members are enlisted as co-owners to avail such rebates.
Refer to this article to know about all the income tax benefits that you can avail while you plan to purchase a property or apply for a home loan.
Note: The rates change from time to time and must be checked with the concerned bank and government at that point of time.