The Indian Government lets citizens get the benefit of tax deductions on their home loan instalments paid in a financial year. This helps them get financial respite to some extent. Nevertheless, individuals can reap these benefits only if they fall under any income slab for which they become liable to pay tax.
Individuals can leverage an income tax calculator to know which slab they fall under.
What are the top tax benefits on home loan?
A borrower should have a clear notion of which tax benefit they are eligible to get under different sections of the Income Tax Act (IT) of India. Individuals can use the online income tax calculator to understand their net taxable income in a financial year. They can find this tool online from the portal of the Income Tax Department of India.
Here are some major tax benefits individuals can avail:
Tax benefits on the principal amount
Under Section 80C of the IT Act of India, individuals will get tax deduction benefits for up to Rs.1.5 lakh on the total principal amount they pay in a financial year.
Deductions on the home loan interest component
Section 24B lets borrowers claim a tax benefit for up to Rs.2 lakh on the total interest they have paid with their instalments in a financial year.
Tax deduction on interest paid during pre-construction
Section 24B also allows borrowers to reap the additional benefit of tax deductions for up to Rs.2 lakh if the pre-construction period of their house is less than 5 years.
Benefits for first-time home buying
Individuals can also leverage tax benefits for up to Rs.50,000 if they are first-time home buyers.
Extra tax deduction on joint home loan
If more than one co-owner jointly borrows home loans, all of them can avail the tax benefit separately. As a result, the total tax benefit amount increases. Alongside this, individuals should also be aware of why they should ideally consider availing a home with their spouse.
So, individuals opting to buy a flat or construct a house can go for taking a home loan. This will help them meet the financial shortages and get the tax benefit at the same time.
How to take a home loan?
Here is a step-by-step process that will help individuals to request a home loan:
- Visit the official website of the preferred lending institution
- Go to the home loan page
- Click on ‘Apply Now’
- Enter the necessary personal information
- Verify the mobile number by entering the OTP
- Enter the tenor and loan amount
- Fill in the form with professional and financial details as asked
- Click on ‘Submit’
Following these simple steps, they will successfully apply online for a home loan. Thereafter, the lender will contact applicants to inform them about the documentation and other procedures they will have to comply with. This is why individuals also need to be aware of all the documents they need while applying for a home loan.
While applying for a home loan, it is also paramount that individuals choose a tenor in which the instalment amount stays within their repayment capacity. They can use a home loan EMI calculator to know which repayment period will fetch them instalments according to their financial strength.
Furthermore, there are several Indian lending institutions that extend pre-approved offers to their customers to ensure that they can enjoy a quick application process. These are pre-available credit options that lenders tailor for their customers. Borrowers can check their pre-approved offers for credit facilities like home loans and loans against property by entering their names and contact details.