As per Section 24(b) of the Income Tax Act, first-time filers are eligible to claim deduction on interest paid on their home loan. The maximum deduction allowed is up to ₹2 lakh per year. However, to avail of this benefit, the loan must be taken for the purpose of purchasing or constructing a residential property, and the construction should be completed within five years.
Deduction on Home Loan Principal Repayment
Under Section 80C of the Income Tax Act, you are eligible for a tax deduction for home loan principal repayment. The maximum deduction permitted is up to ₹1.5 lakh per year. This deduction is part of the overall limit for various investments and expenses eligible for deduction under Section 80C, including investments in EPF, PPF, and life insurance premiums.
Additional Deduction for First-Time Homebuyers
First-time homebuyers can avail an additional deduction of up to ₹50,000 under Section 80EEA. This deduction is available over and above the deductions mentioned earlier. The property's worth cannot exceed ₹45 lakh, and the home loan must be approved between 1 April 2019 and 31 March 2022 in order to be eligible. This deduction is available for the interest paid on the home loan.
Tax Benefits on Joint Home Loans
If you have taken a joint home loan with your spouse or any other co-applicant, both of you can individually claim tax benefits on the interest and principal repaid, subject to the specified limits. This can help in maximizing the overall tax benefits associated with the home loan.
As a first-time tax filer in India, you can avail of several tax benefits if you have taken a home loan. Understanding and utilizing these tax benefits can significantly reduce your tax liability and make owning a home more affordable. To ensure that you get the most of the tax benefits available to you, keep accurate records and seek advice from a tax expert.
Look up more articles here for a smooth first time tax-filing process. All the best!
