Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: TDS :: Central Excise rule to resale the machines to a new company :: empanelment :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: list of goods taxed at 4% :: due date for vat payment :: ACCOUNTING STANDARD :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
General »
 India’s GST among most complex in world, and it is 0% tax rate that is hurting the idea
 Can’t overrule courts with retrospective amendments, says Supreme Court
 Why tax planning should be an all-year round activity
 8 financial tasks you should do in the next 30 days
 Income Tax department may defend CPC in returns fraud case
  Income tax department sends notices to investors over tax treaty gains
 Seven months after GST rollout: Time for handholding over, Centre to intensify efforts to curb tax evasion
 Individual angels may get tax relief too
 The differences between tax and cess
 Startups that raised funds from angel investors face tax scrutiny
 Tax collection assumptions in India's budget ambitious

How to claim tax benefits associated with home loans?
December, 21st 2015

As the calendar year draws to a close, you may be hearing a familiar internal groan as this is when you have to submit the housing loan statement to your employer. You can claim a number of tax benefits on your first home, provided you are aware of the deductions that you are eligible to claim.

Provided you wade through the nitty-gritties efficiently, you can save taxes and manage your finances better. Following are the points you should keep in mind to claim tax benefits related to your home loan.

Principle repayment

Your EMI comprises of two components–the outgo towards principal amount and interest. You can claim a maximum of Rs 1.5 lakh of the principal component of your EMI under Section 80C of the Income Tax Act.

In case your principal outgo is less than Rs 1.5 lakh, you can invest the balance amount in a tax-saving instrument to exhaust the limit. You must remember that you can claim the benefit only when your house is fully constructed.

Moreover, if you decide to sell your house within five years of taking possession, the deductions claimed during previous years would be treated as income during the year of the sale of property and the same would be reversed.

Interest payment

Under Section 24 of the Income Tax Act, you are eligible for tax benefits of up to Rs 2 lakh for a self-occupied property. The cap of Rs 2 lakh is applicable if your family is living in the house or if your house remains vacant.

Deduction is allowed on fully constructed house only and you would not be able to avail any benefit on under-construction houses till the work is complete. In the pre-construction phase, the interest outgo keeps adding up and you can claim deduction on it in equal installments for five years beginning from the year of taking possession.

However, the tax benefit is available only when the construction is done in a time-bound manner and gets completed within three years of availing the loan. If the construction gets delayed, you will be able to claim deduction only for Rs 30,000 per year.

You have to be both the owner as well as the co-borrower to claim tax benefits. If your property is not self-occupied but leased out instead, there is no ceiling for deduction and you can claim the entire interest amount paid. However, while filing Income Tax returns, you will have to show the rent of the house as income.

How to calculate rental value

Step 1: Calculate total rental income.
Step 2: Deduct municipal taxes.
Step 3: Deduct another 30 per cent towards maintenance charges to get the rental value.

Let us understand this with the help of an example.

Suppose the total rental income is Rs 2,00,000 per year. If you deduct municipal taxes of Rs 30,000, the net annual rent would stand at Rs 1,70,000. After deducting another 30 per cent towards maintenance charges, the taxable amount would be Rs 1,19,000.

Deductions on the basis of ownership

You have to be owner or co-owner of the property to claim tax benefits on interest. In case of co-ownership, the amount of the deduction is based on the share you have in the property. Joint owners can separately claim deduction of Rs 2 lakh each on self-occupied property.

To claim deductions, you will require a certificate from the bank that mentions the details of your principle and interest outgo.

If the second home is vacant

Do you know that even if you have not rented out your second home, it will be taken as a rented property? In such a case, the rental income is calculated as per the market rate after a deduction of 30 per cent towards maintenance charge.

However, if you own a house in one city and stay in another city as your job takes you there, the limit of deduction on interest will remain Rs 2 lakh.
Section 80GG of the IT Act stipulates that one can claim deduction up to Rs 24,000 per year if one’s salary does not have an HRA component.

Deduction on stamp duty/registration

You can also claim deduction for payment of stamp duty and registration under Section 80C of the IT Act. You can claim this only in the year in which you have paid the stamp duty and registration fee.

How to get home loan statement

You can submit the home loan statement to your employer or claim it directly while filing your return. If you have failed to inform your employer in time about interest deduction, you can claim benefits at the time of filing returns.

You may log on to your bank or lender’s website to fill in requisite details and download your home loan statement. You may also request your bank to provide you the physical copy of home loan statement.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System development CMS development Content Management Solutions CMS Solutions Content Management Services CMS Services CMS Software

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions