Have you taken out a home loan from these sources? You will not get benefits under section 80C
Highlights
- Under section 24b of the Income Tax Act, one can claim a deduction of up to Rs 2 lakh on interest paid on a home loan.
- These tax benefits are only available if you take out a mortgage from certain entities / persons, as mentioned in section 80C (2) (xviii) (c).
New Delhi: Taking a mortgage in order to buy a house or to build a house has many advantages. First, you can buy a bigger house with a small amount of savings, and second, you get tax benefits on the mortgage interest payment and principal repayment.
Under Section 80C of the Income Tax Act 1961, taxpayers can claim a deduction of up to Rs 1.5 lakh per year to repay the principal of a home loan. This is within the overall limit of section 80C, which also allows the deduction on investments made in tax saving instruments such as ELSS, PPF, life insurance and NPS. Likewise, a tax benefit is also available on the interest payment on a home loan. Under section 24b of the Income Tax Act, one can claim a deduction of up to Rs 2 lakh on interest paid on a home loan.
These tax benefits are only available if you take out a home loan from certain entities / persons, as mentioned in section 80C (2) (xviii) (c), explains tax and investment expert Balwant Jain.
According to the section above, a home loan should be obtained from a bank (private or public), a cooperative bank, the National Housing Bank or housing finance companies like HDFC Limited, etc. to claim deductions under section 80C. Even if a taxpayer receives a mortgage from his employer when the employer is a public company / a public sector company / a university // a cooperative society or any central or state government), he will be able to claim tax advantages under section 80C.
However, if you have taken out a home loan from friends or relatives, as we usually do in an emergency, you will not be able to benefit from the tax benefits of section 80C (on repayment of capital), explains Mr. . Jain. However, the taxpayer will continue to enjoy the benefits of article 24b (on the payment of interest on the mortgage) even if the mortgage is from a friend or relative, he added.
In addition, the additional tax benefit of Rs 50,000 available under section 80EE and Rs 1.5 lakh available under section 80EEA will not be available if the home loan is obtained from a non-entity. recorded.
It should be mentioned here that even if you take out a home loan from a friend, relative or any unregistered lender, you must obtain a certificate of interest to claim tax benefits under section 24b. , if the application is made for an independent property, says Mr. Jain.