Income Tax: Four benefits you must know while repaying a home loan
Income Tax Slabs: Taxpayer who has to repay home loan EMI, it's better to remain in the old income tax slabs than income tax slabs 2020.
Income Tax: After the announcement of new income tax slabs by finance minister Nirmala Sitharaman in Budget 2020, income taxpayers are confused whether they should switch to the new regime or stick with the old one. According to the Money Bill 2020, if you have a home loan EMI to pay, it is better to remain in the old income tax slabs applicable for the FY2019-20. According to the tax and investment experts, an income taxpayer can claim home loan tax rebate under Section 80C, Section 24b and Section 80EEA. They are of the opinion that there are four home loan tax benefits that a home loan borrower must not forget to claim during Income Tax Return (ITR) filing if they are in the old income tax slabs.
Section 80C of Income Tax
Speaking on the income tax benefit that a home loan borrower can claim under Section 80C of the Income Tax Act Jitendra Solanki, a SEBI registered tax and investment expert said, "Under Section 80C, one can claim income tax exemption on up to Rs 1.5 lakh on home loan principal repayment in a particular year. This rebate is available on home construction as well but the property has to be completed within five years."
Solanki said that while buying a home, one pays stamp duty for registration as well. The amount paid on stamp duty for property registration is also exempted from income tax outgo. However, these charges can be claimed within the overall limit of Rs 1.5 lakh.
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Income Tax benefit under Section 24b
This section allows home loan borrowers to claim income tax exemption on home loan interest repayment. Elaborating upon the income tax exemption under Section 24b Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Ùnder Section 24b of the Income Tax Act, a home loan borrower can claim tax exemption up to Rs 2 lakh on home loan interest repayment. This limit includes both pre-construction and post-construction period."
Income Tax deduction under Section 80EEA
The budget 2019 provided a big boost to the ‘Housing for All’ initiative by providing an additional tax deduction of Rs 1.5 lakh on home loan interest payment on home loans availed between 1st April 2019 and 31st March 2020. In order to qualify for tax deduction under section 80EEA, the value of housing property has been capped at Rs 45 lakh. Remember, this benefit can only be availed by the first time home buyers only.
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