If you took a home loan between April 1, 2019 and March 31, 2020 to buy your dream home for less than Rs 45 lakhs and it is your first home, you should be aware of this information. You can get a tax exemption on a home loan up to Rs 5 lakh by March 2022. The deadline for claiming an additional tax deduction of up to Rs 1.5 lakh on home loan interest payments for the purchase of a low-cost property has been extended till March 31, 2022, by the government. As a result, you are eligible for a tax exemption under section 80EEA of the Internal Revenue Code. Furthermore, until March 2022, a total of Rs 5 lakh in tax deductions on home loans can be claimed.
On the principal amount, you can save up to Rs 1.5 lakh
The EMI for a home loan is divided into two components. One is for the loan’s principal amount, and the other is for the interest on the loan’s principal amount. Under section 80C of the Income Tax Act, the principal repayment of a home loan is eligible for a tax exemption of up to Rs 1.5 lakh. This section also includes stamp duty and registration fees.
Exemption from tax on interest payments up to Rs.2 lakh
The payment of interest on a home loan qualifies for a tax exemption of up to Rs 2 lakh under Section 24(B) of the Income Tax Act. The construction work must, however, be finished within the next five years after the end of the financial year in which the home loan is acquired. Who can bring a tax deduction of merely Rs 30,000 if this is not the case?
Finance Minister’s Expectations
If you add all three together, you can get a tax exemption on your home loan of up to Rs 5 lakh until March 2022. However, it is probable that Finance Minister Nirmala Sitharaman would prolong this term in the upcoming budget, providing significant relief to taxpayers.
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