How can home loan help you in income tax deductions?
Under section 80c of Income Tax Act, one can claim deduction on repayment of principal amount.
Under section 24(b), deduction can be made for interest payments but subject to conditions.
If loan amount is more than 25 lakhs than deduction allowed under section 80EE, but this is only for the loan received in the year 2013-14. And this deduction is allowed only upto 100,000.
The section under 24(g) envisages the deduction of interest payments only after construction, whereas the section 80EE is more liberal in the wordings, it states " acquisition of residential property", the same means to say th interest paid to include the interest from date of EMI to the date of acquistion of property.
Section 80EE has been inserted specifically for residential property for those working class forum, who would like to invest upto 40 Lakhs.
The interest deduction would be limited to the amount of Rs. 25 Lakhs only.
Hope the section and its intension by the legislature is much clear.
CA. Sundeep Kamath