Are You Missing Out on Major Tax Savings from Your Home and EV Loans
Thousands of Indian taxpayers could be significantly reducing their tax burden by fully utilizing deductions on their home and Electric Vehicle (EV) loan repayments, yet many are not claiming the full benefits. As the tax filing deadline approaches, understanding the various provisions of the Income Tax Act is crucial for maximizing your savings.
Here’s a comprehensive guide to ensure you don’t overlook these valuable deductions:
Unlocking Home Loan Tax Benefits
1. Section 24(b) – Interest on Home Loan: This section allows deductions on the interest component of your home loan EMI. * Self-occupied property: You can claim up to ₹2 lakh per financial year. * Let-out or rented properties: There’s no upper limit on interest deduction, though only ₹2 lakh of loss can be set off against other income in a financial year. * Important: This section covers only the interest portion; the principal is handled separately.
2. Section 80C – Principal Repayment: The principal amount of your EMI, along with stamp duty and registration charges, is deductible up to ₹1.5 lakh per annum. * Conditions: The house must be constructed and ready for possession, and the loan must be for a residential property. * Exclusions: Loans for repairs, renovation, or reconstruction are not eligible. * Note: This benefit is not available under the new tax regime.
3. Extra Perks for Homebuyers: To promote affordable housing, the government introduced additional sections: * Section 80EE: Offers an additional deduction of ₹50,000 on interest for first-time homebuyers. This applies to loans sanctioned between April 1, 2016, and March 31, 2017, where the loan amount doesn’t exceed ₹35 lakh and property value is capped at ₹50 lakh. * Section 80EEA: Provides an additional deduction of ₹1.5 lakh on interest for affordable housing loans taken between April 1, 2019, and March 31, 2022. The stamp duty value of the property must not exceed ₹45 lakh. This deduction is available even to Non-Resident Individuals (NRIs).
Driving Green with EV Loan Tax Benefits
Section 80EEB: If you’ve taken a loan for an Electric Vehicle, you can claim a deduction of up to ₹1.5 lakh on the interest paid. * Applicability: This applies to EV loans sanctioned between April 1, 2019, and March 31, 2023. * Scope: The benefit covers both electric two-wheelers and four-wheelers, making eco-friendly transportation more accessible.
Who Can Claim and What to Remember
- Eligibility: Generally, any individual owning a residential property (self-occupied or rented) is eligible for home loan deductions under Section 24.
- Dual Benefits: You can even claim both home loan benefits and House Rent Allowance (HRA) if specific conditions are met, such as residing in a rented house in a different city for work while owning a home elsewhere.
- Documentation is Key: Your Income Tax Return forms specifically ask for loan and interest details under these sections. Ensure accurate entry and keep all supporting documents, including interest certificates from your lender, loan sanction letters, EMI statements, and property documents, handy for verification by the Income Tax Department.
Don’t let these valuable tax savings slip away! By accurately claiming your eligible deductions, you can significantly reduce your tax liability this filing season.