Learn more about tax benefits of our Home Loan Scheme under TMB Retail Loan Products.
You can save significant part of your tax liability if you have taken a home loan. The following information is based on current Indian Tax Regulations and here’s how it works:
As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 1,50,000 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 01st Mar 1999). The interest payable for the pre-acquisition or pre - construction period would be deductible in five equal annual instalments 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).
As per the newly introduced Sections 80C read with section 80CCE of the Income Tax Act, 1961 the principal repayment up to Rs. 1,00,000 on your home loan will be allowed as a deduction from the gross total income subject to fulfilment of prescribed conditions. Let us consider a hypothetical example:
Suppose your taxable income is: 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 ).
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 Tamilnad Mercantile 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.