If you purchase an affordable home, you can claim deduction under Section 80C, Section 24 and Section 80EEA. Let’s analyze how you can save income tax by purchasing an affordable home.
As per section 80EEA, the interest on loan taken for an affordable home can be claimed as a deduction with a limit of INR 1.5 lakhs.
As per Section 80EEA, the home loan should be taken
Section 80EEA – Conditions for eligibility
When you purchase an affordable home, you get deduction under
Now, let’s use the income tax calculator to see how much tax you can save with loan on an affordable home.
Step 2: Key in your salary details
Step 3: Declare your investments
Step 4: Now, calculate Income Tax
As per the calculation, you have a total tax liability of INR 140001
Suppose you have taken a home loan for 45 lakhs for a period of 10 years, and you have interest of INR 3.6 lakhs and principle of INR 3 lakhs for the current financial year.
Step 5: Declare your home loan under Section 24, Section 80EEA and Section 80C
Section 24 has a limit of 2 lakhs. So, let’s put interest of INR 2 lakhs under Section 24.
The remaining interest can be put under Section 80EEA which has a limit of INR 1.5 lakhs.
The principal amount can be put under Section 80C.
Step 6: Calculate Income Tax again
As you see, the total tax liability has come down to INR 28334
As you see, you have made huge tax savings with your affordable home. Remember to get a certificate from your bank on the interest and principal you paid for the financial year.
Frequently Asked Questions
What is the maximum deduction available if you purchase an affordable home?
Section 80C, Section 24 and Section 80EEA provides a maximum deduction of INR 5 lakhs
What is the maximum tax benefit if you purchase an affordable home?
Maximum tax deduction available is for INR 5 lakhs. So, you get income tax benefit of up to INR 1.5 lakhs
What is the maximum deduction for interest paid on home loan under Section 80EEA?
Under Section 80EEA the maximum deduction available is for INR 1.5 lakhs
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