The Income Tax Act, 1961 allows tax deduction to taxpayers on repayment of home loans. These deductions can broadly be understood as mentioned below:
| Particulars | Under Section 24 | Under Section 80C |
|---|---|---|
| Deduction allowed for | Interest | Principal |
| Basis of deduction | Accrual | Actual Payment |
| Quantum of deduction allowed | Self Occupied Property: Rs150,000 | Non Occupied Property: No Limit Rs100,000 |
| Purpose of Loan | Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential Property | Purchase/Construction of a new Residential Property |
| Eligibility for Claiming Tax Deduction | Purchase/Construction should be completed within 3 years | None |
| Restriction on Sale of Property | None | Tax Deduction reversed if the property is sold within 5 years |
As the benefits could vary from year to year, it is advisable to check the current benefits available, with your tax consultant or with the Income Tax Dept. of India (www.incometaxindia.gov.in)