Modi Gift! Home loan EMI burden to reduce with Bajaj Finserv
New Delhi : The 'Housing for All' motto of the Indian Government received another boost when the Finance Minister announced the Union Budget of 2019. A proposal was made to increase in tax deduction limits for interest payable on the home loan.
With this new change, homebuyers can expect exemption benefits in repayment of their housing loans by up to Rs. 7 Lakh over a 15-year loan repayment tenor. The move also brings individuals who could not afford to buy a house under the ambit of affordable housing through reduced interest burden. The availability of home loans at attractive interest rates further contributes to making housing affordable for people.
They also bring pre-approved offers that make the process of availing finance hassle-free and save valuable time. These offers are available on secured credits like home loans as well as unsecured credits like personal loans; along with several other financial products. All you need to do to check out your pre-approved offer is provide a few essential details like your name and contact number.
Hence, the combination of financing options like housing loan and increased tax benefits on home loan interest takes the ordinary people a step towards their dream of affordable housing. Let’s check out how your housing loan EMI burden will reduce.
The increased limit of the home loan tax deduction – An overview
The Income Tax Act, 1961 allows individuals to claim deductions in their taxable income against interest payments of the availed housing loans. However, there’s a limit to the amount you can claim for deduction in a financial year (FY).
Earlier, the deduction could be claimed up to a maximum of Rs. 2 Lakh for a given FY for all individuals having taxable income. However, as per the new changes announced in the 2019 Budget by the Finance Minister, the limit has been extended to Rs. 3.5 Lakh in an FY.
Thus, when repaying your home loan, you can claim exemptions of up to Rs. 3.5 Lakh under Section 24(b) of the Income-Tax Act, 1961 against housing loan interest payments.
Nevertheless, the increase in deduction limit comes with a few conditions mentioned below.
• This additional tax of Rs. 1.5 Lakh over Rs. 2 Lakh can only be claimed if you purchase a residential property to self-occupy.
• The house’s purchase cost should not be more than Rs. 45 Lakh.
• It is applicable for loans taken up to 31st March 2020.
• The person claiming this deduction should be a first-time homebuyer.
• Individual availing this loan should not also own a residential house property until the day the loan is sanctioned.
Know how increased deduction reduces housing loan EMI burden
EMI or Equated Monthly Instalment is a sum of the principal amount of the loan and interest accruing on it. Thus, when you pay your EMIs, you reduce both principal loan liability and interest payable on the same.
When claiming a deduction from your taxable income against the interest payments on home loan, you can add up the interest component of your EMI paid for the year. You may use the home loan EMI calculator to compute the interest component on your loan EMIs. Also, you may compute the EMIs with this calculator and enjoy numerous benefits of calculating EMI before taking a home loan.
Claiming the interest amount as a deduction from your taxable income will thus help you save money. Considering that interest component of home loans run into lakhs in the initial years, assesses will gain significant monetary benefits.
To further reduce your EMI burden, you can opt for home loan offers with the lowest interest rates and a longer tenor. You may also consider other important home loan fees and charges associated and opt for a home loan online apply. It makes owning a house further affordable.