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Budget 2021 update :It has been proposed to exempt the senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.
There are four steps to claim interest on your home loan deduction. The limit on the amount you can claim as interest on your home loan deduction has been increased to Rs.2,00,000 from the financial year 2014-15. As we have seen here, this can bring significant tax savings. Let’s understand what are the steps you need to take to claim this deduction –
In case of a self-occupied house property, the amount of the deduction is limited to Rs.2,00,000. However, for let-out house property, there is no limit on the amount of interest you can claim as a deduction. From FY 2017-18 onwards, the deduction for home loan interest on let-out property is also limited to the extent to which loss of such house property does not exceed Rs.2 lakhs.
Here are the steps to calculate your income from House Property.
Gross Value of the property (nil in case of Self Occupied Property and Rental Value if rented)
Less: Municipal Taxes actually paid
Less: Standard Deduction (30% of Net Annual Value= Gross Value less municipal taxes)
Less: Deduction for interest on home loan
= Income from House Property.
Do note that when you file your return with ClearTax, you DON’T have to do any of these calculations. You only need to enter your details and we will automatically calculate the amount which will be your Income from House Property.
In case there is Principal Repayment by you during the year (check your loan instalment details) – principal repayments are allowed to claim interest on home loan deduction under section 80 C. However, the total amount allowed to be claimed under section 80C is capped at Rs 1,50,000.