Deduction of Housing Loan Repayment and Interest Of Principal amount of Housing loan and Its Interest Component

Deduction under SEC-80C (Only For Principal Loan Repayment) Principal repayment component of up to Rs. 1,50,000 (Rs. 2,00,000 for senior citizens) can be clubbed under the overall limit for tax saving instruments eligible under Section 80C. Available only for purchase or construction of residential property Deduction available only for self occupied property. Deduction is available only when actual payment is done(i.e on cash basis and not on accrual basis, so the principal portion unpaid EMI and EMI’s accrued is not eligible for deduction Tax Deduction claimed would be reversed if Property sold within 5 years from the end of financial year in which such property is acquired by him.

Section 24 (Only for Interest Component) Deduction is available on Accrual basis. Deduction available if loan taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property. Annual Interest component of up to Rs. 2,00,000(Rs. 3,00,000 for senior citizens) can be claimed as deduction against income.(If completed within 3 years from the end of F.Y, If Not then deduction will be reduced to Rs 30,000) No maximum Limit if Not a Self occupied Property.

Deduction under 80EE (Interest Component Only) Additional tax deduction of Rs 1,00,000 is available to First time home buyers in respect of Interest on home loan.(This deduction will be over and above the deduction limit of Rs 2,00,000 allowed for self-occupied properties under section 24b of the Income Tax Act Conditions:- 1) This is your 1 st house purchased. 2) Value of this house is Rs 40 lakhs or less 3) Loan taken for this house is Rs 25lakhs or less 4) Loan has been sanctioned by a Financial Institution. 5) Loan has been sanctioned between to ) As on the date loan is sanctioned no other house is owned by the tax payer 7) Deduction available for F.Y only (however if interest payable in F.Y is less than 1,00,000, then the balance amount can be claimed in F.Y 14-15).

Section 80EE As per the Finance Bill, 2013, Finance Minister announced that, “I propose to allow such home buyers an additional deduction of interest of Rs /- to be claimed in A.Y If the limit is not exhausted, the balance may be claimed in A.Y This deduction will be over and above the deduction of Rs.2,00,000/- allowed under section 24 of the income tax Act.” (Inserted on )

Summary Of Deductions for Interest Component ParticularsSelf Occupied PropertyNon-Self Occupied Property Section 24Rs 2,00,000No Limit Section 80 EERs 1,00,000

Summary For Section 24 and 80C ParticularsSection 24Section 80C Tax Deduction AllowedInterestPrincipal Amount Basis Of Tax DeductionAccrual BasisPaid basis QuantumSOP=2,00,000 Non-SOP=No limit Rs 1,50,000 Purpose Of LoanPurchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property. Purchase / Construction of a new House Property Eligibility of Claiming Tax deduction Purchase/ Construction should be completed within 3 years N/A Restriction on sale of propertyN/ATax Deduction claimed would be reversed if Property sold within 5 years