Quality affordable housing for all has been high up on the agenda of several governments in India for a long time. The finance budget of 2019 addresses the issue directly by raising the tax benefit on home loans from Rs. 2 lakhs to Rs. 3.5 lakhs. This Rs. 1.5 lakh subsidy will allow a potential homeowner to claim a higher chunk in their IT return each year, which will ultimately increase their disposable income. 

Conditions for Availing Higher Tax Benefit

  • The individual must not own an additional residential property on the day a housing loan is sanctioned
  • This benefit is only applicable to properties with a stamp duty value of up to Rs. 45,00,000
  • The hiked deduction can only be claimed on home loans sanctioned in the current financial year i.e. loans taken by March 31, 2020
  • This tax benefit cannot be availed if the property bought with housing finance is still under construction

Who Will Benefit the Most from Enhanced Tax Deductions?

  • First-time homeowners in the middle-income group
  • People in tier 2 and tier 3 cities, as the property rates are lower and one can comfortably find quality housing within Rs. 45,00,000
  • Single income families
  • The housing sector and realtors

How to Calculate Tax Refund on Home Loans?

The simplest way to calculate the tax refund on your home loan is to use a reliable online calculator. Input your home loan details and a personalised tabulated assessment will pop up. The information that you need to keep handy for this is:

  • Gross loan amount
  • Repayment duration
  • Home loan interest rate
  • Date of first EMI
  • Gross annual income
  • List of existing tax deductions/benefits

Information Needed to File for Increased Tax Benefit

Claiming tax benefits for your housing loan is a straightforward process. Follow the below steps:

Step 1: Make sure that you are the borrower or the co-borrower.

Step 2: Calculate the exact amount of tax deduction using an online calculator.

Step 3: Provide your loan interest certificate to your employer for TDS adjustment. Alternatively, you can also choose to file the tax return yourself.

Step 4: If you are self-employed simply calculate the tax deduction you are eligible for and file your IT return. Keep the above documents handy, should you need them.

This regulation surely comes as a relief for potential home buyers and will also offer a further incentive to those debating renting vs. buying. This policy will translate into a benefitofup to Rs. 7 lakhs for the middle-class home buyer, over a loan period of 15 years.Taking a home loan which automatically allows for this hiked tax benefit within this financial year makes a lot of sense. Tata Capital provides housing finance at compelling home loan interest rates. Simply log on to our website and use our convenient home loan EMI calculator to assess your home loan eligibility. Our home loan calculator will also help you calculate monthly EMIs accurately. Visit Tata Capital today!

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