Updated on: Mar 28th, 2024
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6 min read
There are four steps to claim interest on your home loan deduction. A deduction for interest payments up to Rs 1,50,000 is available under Section 80EEA. This deduction is over and above the deduction of Rs 2 lakh for interest payments available under Section 24(b) of the Income Tax Act. Therefore, taxpayers can claim a total deduction of Rs 3.5 lakh for interest on a home loan if they meet the conditions of section 80EEA.
As we have seen here, this can bring significant tax savings. Let’s understand what steps you need to take to claim this deduction.
In the case of a self-occupied house property, the deduction amount is limited to Rs.2 lakh. 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 the let-out property is also limited to the extent to which the loss of such house property is limited to 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.
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.
If you have a Principal Repayment during the year (check your loan instalment details), principal repayments can be claimed as a deduction under Section 80C. However, the total amount allowed to be claimed under section 80C is capped at Rs 1,50,000. Moreover, it is available only under the Old Tax Regime.
Four steps to claim interest on home loan deduction including documents needed, submission to employer, income calculation, and claiming under Section 80C. Total deduction is Rs 3.5 lakh. Tax savings are significant.