How to claim tax benefit of Rs. 3.5 lakh on Home Loan

It is now possible to claim a total tax benefit of a whopping Rs. 3.5 lakh if you are eligible for both Sections 24 and 80EEA of the Income Tax Act, 1961. Section 24 allows you to claim a tax deduction of up to Rs. 2 lakhs of the total income, on the interest portion paid on a home loan. Section 80EEA, on the other hand, is a new section proposed in last year’s budget. This section allows an additional tax benefit of up to Rs. 1.5 lakh on the interest paid on a home loan.

Under Section 24, you, the homeowner, can claim deduction provided you or your family members are residing in the purchased property. However, the loan must have been taken on or after 1 April 1999 for the purchase or construction of the property. Also, the purchase or construction of the property must have been completed within five years of availing the loan. This section also has the provision to claim a deduction on pre-construction interest in five equal annual parts.

Section 80EEA offers additional deduction that substantially helps lower the burden of home loan interest rates on homeowners. This deduction is available on the interest paid on low-cost housing loans availed during the financial year 2019-20. Under the government’s ‘Housing for All’ initiative, this new section promises to be of big help; especially for people who are worried looking at the affordability of the figures projected by a home loan EMI calculator.

The benefits of Section 80EEA are available only to individuals, and entities like companies and partnership cannot avail it. The maximum deduction of Rs 1.5 lakh is available against a housing loan availed for buying a residential property, and from a housing finance company or institution only. This benefit is available only for first-time homebuyers and for properties below the value of Rs. 45 lakhs. The section also specifies conditions on the carpet area of properties eligible for the benefits. The maximum allowable carpet area under this section is 60 square meters (645 square feet) in specified metro cities and 90 square meters (968 square feet) in other places. Besides, the benefit is applicable only for properties approved on or after 1 September 2019.

Thus, to claim a tax deduction of Rs. 3.5 lakh, you have to qualify for both the sections mentioned above. Tata Capital offers attractive interest rates and repayment terms for home loans. Home loans provided by Tata Capital are available for anyone between the age of 24 and 65. You can check your eligibility using Tata Capital’s home loan calculator and meet your home loan needs now.