Section 24: Interest paid on housing loan

You can save a good amount of money in tax, if you have taken a home loan. A home loan monthly install­ment like any other loan install­ment has two com­po­nents – Prin­ci­pal and Interest.

Tax Sav­ings on home loans – Inter­est repayment

Accord­ing to Sec 24 of the Income Tax Act, 1961 a deduc­tion up to Rs. 150,000 can be claimed. This deduc­tion is claimed towards the total inter­est you pay on the home loan towards pur­chase or con­struc­tion of house.

Tax Sav­ings on home loan – Prin­ci­pal repay­ment of home loan installments

The prin­ci­pal repay­ment up to Rs. 100,000 on your home loan will be allowed as a deduc­tion under sec­tion 80C of income tax act.

On home loan, you can save upto Rs 2,50,000 per annum ( Rs 1,50,000 – Inter­est repay­ment and Rs 1,00,000 – Prin­ci­pal repay­ment). That means you can do a tax sav­ings on home loan for more than Rs 20,000 per month.

Related posts:

1. Sec­tion 80E: Inter­est paid on edu­ca­tional loans
2. Tax ben­e­fits on home loans
3. Home Loan – Demystified
4. 8 Hous­ing Loan Terms — Use­ful for home loan seekers
5. Sec­tion 80C of Income Tax