Home Loan Tax: Want to Claim Your Tax Benefits? Follow These Steps

As per the Income Tax Act of India, 1961, individuals can avail tax benefits on both the interest and principal component of their home loans, upon fulfilling certain requisites.

Under Section 80C, individuals can claim up to Rs.1.50 lakh per year as tax deductions, and they can only do so once the home construction is complete. Similarly, under Section 80EE, borrowers can expect tax deductions (maximum up to Rs.2 lakh per year) on the interest payable.

Section 24(b) allows borrowers to claim a tax deduction for the purpose of both constructing a new house and purchasing a residential property. The process of claiming home loan tax benefit is mentioned below -

Step 1: Home loan borrowers are required to calculate the tax deduction first, and they also need to make sure that the house is in their name.

Step 2: One also needs to submit the home loan interest certificate to their respective employers in order to adjust the tax. Individuals can skip this part if they want to file the ITR themselves without getting the employer involved.

Step 3: Borrowers must check the home loan eligibility criteria before getting into this process, as self-employed individuals are not required to submit this certificate. However, it is better to keep the certificate handy in case the IT department looks for it during the filing process.

Since there are certain eligibility parameters that one needs to meet to avail these exemptions, it is advisable to check the same before going forward with the process. This should be done at the very onset of availing a loan, ideally while using EMI calculator to calculate the repayment liability.

Also, to utilise the home loan tax benefits, individuals need to make sure that the house gets constructed with 5 years, otherwise they can claim only up to Rs.30,000, instead of Rs.2 lakh.