Did you know that you can receive tax benefits under three sections, 88EE, 80C, and 24, of the Income Tax Act (ITA) on a home loan? Yes, as a housing loan borrower, you can benefit from particular tax incentives as mentioned below:

  • Under section 80C, you can claim a tax deduction of up to Rs. 1.5 lakhs on your principal amount, including stamp duty and registration charges.
  • Section 24 provision allows you to claim maximum tax deductions of up to Rs. 2 lakhs on the interest amount.
  • Additionally, with provision 88EE, you can get an additional Rs. 50,000 on the payable interest every year.

The only caveats being the home loan amount shouldn’t be over 35 lakhs, and the property value must be under Rs. 50 lakhs.

If you’re servicing a joint loan, you can also claim additional tax deductions on loan repayments. This is because each co-applicant can claim benefits on the housing loan separately.

However, given the different conditions to avail tax benefits and the varying amounts you can claim, keeping track of transactions becomes difficult. Here, using a home loan tax saving calculator can help you out!

What is a housing loan tax exemption calculator?

As the name suggests, the calculator helps you estimate the total amount of tax benefits you can claim under the ITA in a single year. It only asks you to enter a few details related to your gross income, debt liabilities, etc., and provides a clear picture of your taxable income.

Now that you know what the calculator is – let us look at how the calculator estimates the deductions as well.

Additional Read: What Are Different Types of Home Loan Calculators   

How does a house loan tax exemption calculator work?

The calculator takes data such as the type of profile (regular or senior citizen), your gross annual income for the financial year, the principal amount repaid, housing loan payments, and the tax deductions you’re eligible to claim.  

The housing loan payments or EMIs are calculated using the principal loan amount, the loan tenure, and the home loan interest rates.

After entering this information, all you need to do is click ‘Calculate’. It automatically displays the estimated tax deductions on the screen.

How to use a tax exemption calculator to plan your budget?

Since housing loans are large, long-term commitments, you shouldn’t miss out on the tax incentives and plan ahead. To set a proper budget for repayments and savings, you will require details of all your income sources and expenditure, including the tax benefits you can avail of. The tax deduction calculator can help you do this too.

Simply follow the steps as mentioned below:

  1. Choose a preferred home loan EMI calculator online.
  2. Enter the EMI value, along with details of your profile type, annual income, and the principal repaid, to estimate tax deductions you’ll get overtime.
  3. Finally, click on the ‘Calculate’ button.

It’s that simple!

Additional Read: Understanding the Benefits of a Home Loan Calculator

Summing up

Along with estimating the tax benefits applicable, the calculator helps plan your budget too. But if you’re a new loan applicant, choosing the right lender is just as important. Turn to a trusted lender like Tata Capital to avail of a competitive home loan plan. Connect today!

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