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#1
10-20-2005, 09:34 PM
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Tax benefit for Home Loan
You can save significant part of your tax liability if you have taken a home loan. Here's how it works:
Interest paid on the home loan As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 150,000 towards the total interest payable on the home loan towards purchase / construction of house property can be claimed while computing the income from house property. (The deduction stands reduced to Rs 30,000 in case of loans taken prior to March 1, 1999). The interest payable for the pre-acquisition or pre-construction period would be deductible in five equal annual installments commencing from the year in which the house has been acquired or constructed. Please remember that in case of self occupied property, this deduction is allowed only for one such self - occupied property. The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house property is eligible for deduction under section 24(b). Principal repayment of the home loan As per the newly introduced Sections 80C read with section 80CCE of the Income Tax Act, 1961 the principal repayment up to Rs. 100,000 on your home loan will be allowed as a deduction from the gross total income subject to fulfillment of prescribed conditions. Let us consider a hypothetical example. Your taxable Income: Rs 5,50,000 Principal repayment for the same year: Rs 1,10,000 and Interest payable for the year : Rs 1,60,000 Total Deductions allowed: Rs 2,50,000 (Rs 1,50,000 towards interest payable & Rs 1,00,000 for principal repayment of the loan) Thus, your taxable income will reduce to Rs 3,00,000 ( Rs 5,50,000 - Rs 2,50,000 ). Disclaimer: The taxation implications given above are summarized in brief for the general understanding and reference. The tax material is not exhaustive and not intended to be advice on any particular matter. The clients should verify all the facts, law and contents with the text of the prevailing statutes and seek appropriate professional advice before acting on the basis of any information contained herein as the taxation implications may vary depending upon the facts in each case and the tax laws are subject to change from time to time and ICICI Bank Ltd is absolved of any liability to any person, in respect of anything done or omitted to be done by any customer by placing reliance upon the contents of this material 
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#2
04-30-2009, 12:16 PM
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A number of salaried consumers take a home loan to acquire a residential property, but do not stay in that property for various reasons. They stay in rented premises for which they pay rent. If they are receiving a house rent allowance from their employer, a question frequently arises-whether they can claim exemption of their HRA based on the rent actually paid by them, as well as the interest payable on the loan taken to acquire the owned property.
The Income Tax Act has incentives for those who buy residential property. The interest paid on a housing loan borrowed to purchase or construct a house is deductible from the total income of an income tax assessee. This has been a major incentive that encourages people to invest in a house. Resident Indians are eligible for certain tax benefits on the amount paid towards home loan repayment under the Income Tax Act 1961. Tax benefits can be claimed on interest amount repaid as well as the principle amount repaid.
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