Home loan is the option that helps you save maximum income tax. Let’s analyze how much income tax you can save with Home Loan!
When to claim Income Tax Deduction?
![Income Tax Home Loan Income Tax Home Loan](https://lenvica.com/wp-content/uploads/2021/11/House-Loan.jpg)
![Housing Loan EMI Housing Loan EMI](https://lenvica.com/wp-content/uploads/2021/11/EMI-Home-Loan.jpg)
Components of Housing Loan EMI
Home Loan EMI has two components:
Income Tax Sections
![Income Tax Home Loan Income tax Home Loan](https://lenvica.com/wp-content/uploads/2021/11/Housing-Loan.jpg)
![Home Loan Eligibility Home Loan Eligibility](https://lenvica.com/wp-content/uploads/2021/11/Housing-Loan-EMI.jpg)
Conditions for Eligibility
Additional Benefit
You can claim additional benefits under Section 80EEA
![Home loan Benefit Home loan Benefit](https://lenvica.com/wp-content/uploads/2021/11/HOUSE.jpg)
Now, let’s use the income tax calculator to see how much tax you can save with home loan.
Step 2: Key in your salary details
![Salary Earnings Salary Earnings](https://lenvica.com/wp-content/uploads/2021/11/Salary-Earnings-2.png)
![Salary Deduction Salary Deductions](https://lenvica.com/wp-content/uploads/2021/11/Salary-Deduction-2.png)
Step 3: Declare your investments
![Declaration Declarations of income tax home loan](https://lenvica.com/wp-content/uploads/2021/11/Declaration-4.png)
Step 4: Now, Calculate Income Tax
![Calculate Income Tax Calculate Income Tax Home Loan](https://lenvica.com/wp-content/uploads/2021/11/calculate-income.png)
As per the calculation, you have a total tax liability of INR 160000
Suppose you have taken a home loan to purchase a house property for 50 lakhs for a period of 10 years, and you have interest of INR 2.5 lakhs and principle of INR 1.6 lakhs for the current financial year.
Step 5: Declare your Home Loan under Section 24
Section 24 has a limit of 2 lakhs. So, let’s put interest of INR 2.5 lakhs under Section 24.
![Section 24(b) Section 24(b)](https://lenvica.com/wp-content/uploads/2021/11/Section-24b.png)
The principal amount can be put under Section 80C.
![Section 80C Principle Amount Section 80C Principle Amount](https://lenvica.com/wp-content/uploads/2021/11/Section-80C-Principle.png)
Step 6: Calculate Income Tax again
![Income Tax with Home Loan Calculate Income Tax with Home Loan](https://lenvica.com/wp-content/uploads/2021/11/Calculation-1.png)
As you see, the total tax liability has come down to INR 72867
As you see, you have made huge tax savings with your home loan. Remember to get a certificate from your bank on the interest and principal you paid for the financial year.
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