Taking a home loan to buy your dream house in West Bengal? There isgood news for all new home buyers. On 1stFebruary 2021, in Union budget 2021the Finance Minister Nirmala Sitharamanhas extendedthe deadline till 31st March 2022 for availing Income Tax deductions on payment of interest on home loans. In the previous budget, the government extended the deadline to 31st March 2021. There are different provisions such as Section 80C, Section 24 (b) and Section 80EE for claiming tax exemption as a home loan borrower under the Income Tax Act, 1961.Additionally, if you apply for a home loan underPradhan Mantri Awas Yojana Credit Linked Subsidy Scheme(PMAY CLSS), you can get tax benefits under Section 80EEA. In this article, we are going to discuss income tax benefits for home loans in West Bengal in 2021-22.
Home Loan Tax Benefit (FY 2021-2022):
Union Budget 2021-22:
Here is all you need to know from the current financial year budget presented by Union Finance Minister Nirmala Sitharaman on 1st February 2021:
- You can claim an additional income tax exemption of Rs. 1.5lakh on paying the interest of your home loan for an affordable home till 31st March 2022.
- Tax abatement can be claimed for affordable houses till 31stMarch 2022.
- Tax education can be claimed on affordable rental housing projects.
Tax Exemption U/S 80C:
During each financial year, ahome loan borrower can claim income tax relief of up to Rs.1.5lakh on payment of the principal amount. The conditions for availing of this deduction under this section are as follows:
- You can not claim deduction under Section 80C until your propertyconstruction is completed.
- If your resale the house before 5 years of possession, the entire amount that you claimed as tax benefit will be marked as your income of the financial year on which you are selling the property.
Tax Exemption U/S 24(b):
Section 24 (b) under the Income Tax Act, 1961 allows a home loan borrower a tax deduction of up toRs. 2lakh on the payment of interest on his/her home loan. The limitations of this section are:
- The property has to be self-occupied.
- Inthe case of a rented property, there is no maximum limit for tax exemption.
- The construction of the property must be completed within 5 years ofthe home loan sanction.
Tax Exemption U/S 80EE:
Only first time home buyers can take benefit under this section and the maximum limit is Rs. 50,000 on the interest payment. This benefit is clubbed with Section 24 (b). The restrictions of this sections are:
- The loan must be taken between 1st April 2016 and 31st March 2017.
- Applicable only for the first property purchase.
- The valuation of the property must not exceed the barrier of Rs 50 lakh and the home loan amount should be Rs 35 lakh or less.
Tax Exemption U/S 80EEA:
The Central Government aims to provide 1 crore affordable homes in the urban areas under the “housing for all by 2022” scheme for the Middle Income Group (MIG), Low Income Group (LIG) and Economically Weaker Section (EWS). To boost this program Section 80EEA was launched in 2019 by the Union Finance Minister Nirmala Sitharaman, aiming to provide an additional 1.5 lakh tax deduction along with the tax abatement allowedunder Section 24 (b). In the Union Budget for the financial year 2021-22, Minister Sitharaman has extended the privileges under this category till 31st March 2022. Let’s take a look at the conditions for claiming the deduction underthis section:
- Only first-time property owners can avail of this deduction, which means the owner can not have another property in his name.
- The deduction can be availed for interest payment onlyand the maximum deduction limit is Rs. 1.5 lakh.
- The loan must get sanctioned between 1st April 2019 and 31st March 2021.
- Since the agenda for launching this section was to boost the PMAY scheme, the property should be an affordable one and the price cap should not exceed Rs. 45 lakhs.
- If the property owner wants to claim deduction under this section then he can not claim benefits under Section 80EE.
Tax Exemptionon Joint Home Loan:
Two or more co-owners of a singular property can apply for a joint home loan to get greater tax benefits as each of the owners will enjoy up to Rs. 2 lakh on interest payments and up to Rs. 1.5 lakh on reimbursing the principal amount.
Process of Claiming Tax Holiday on Home Loan:
- Calculate the total amount of deduction to be claimed.
- The property has to be owned by you or the taxpayer needs to be the co-borrower of the home loan.
- The taxpayer needs to submit the home loan interest certificate to his/her employer to adjust the deduction with TDS.
- In case you do not want to take that matter to your employer, you must file the ITR yourself and submit the home loan interest certificate as required.
- Self-employed people do not need to submit the certificate. But it is advised to keep the certificate with them since the IT department may need it.
Calculating Tax Deduction on Home Loan:
There are online calculators available for calculating your tax benefits on the home loan. All you need to do is to submit your home loan details and then click on “calculate”. You will get a detailed tabulation pop up. Keep these below-listedpieces of information handy while checking the online platform:
- Principal amount
- Rate of interest
- Starting date of the loan
- Gross annual income
- Existing deduction under Section 80C/D