Principal amount on house loan shown in saving 80C
The principal portion of the EMI paid for the year is allowed as a deduction under Section 80C. The maximum amount that can be claimed is up to Rs 1.5 lakh. But to claim this deduction, the house property should not be sold within five years of possession.
Can we claim principal amount of housing loan under 80C?
Under section 80C of the Income Tax Act, the maximum deduction allowed for the repayment of the principal amount of a home loan is Rs. 1.5 lakh. Deduction under section 80C also includes investments done in the PPF Account, Equity Oriented Mutual funds, Tax Saving Fixed Deposits, National Savings Certificate, etc.
Is principal amount tax deductible?
Principal – No
The principal is the total amount you borrow from the lender. It’s not deductible. The portion of your house payment that goes toward the principal is generally smaller during the first years of the mortgage term but increases as the term progresses.
Where do I put principal amount in ITR?
In your ITR form, you have a section that says deductions. There you will have to include: Deductions under Section 80C. Here the taxpayer has to enter the contributions he has made towards PPF, EPF, LIC Premiums paid and the principal repayment made towards the home loan.
How can we save tax Apart from 80C and home loan?
Best 10 Tax Saving Investment Options Other Than 80C
- Tax saving with NPS under Section 80CCD (1B): …
- Tax savings on Health insurance premiums under Section 80D: …
- Tax savings on repayment of an Education loan under Section 80E: …
- Tax savings on Interest component of Home loan under Section 24:
Is home loan principal tax deductible?
Yes, home loan principal is part of Section 80C of the Income Tax Act. Under this section, an individual is entitled to tax deductions on the amount paid as repayment of the principal component on the housing loan. An amount up to Rs. 1.50 lakh can be claimed as tax deductions under Section 80C.
Which loans are tax deductible?
Let’s throw light on three important loans that qualify for a tax rebate as per the provisions of the Income Tax Act, 1961.
- Education Loan Repayment: Deductions Under Section 80E. …
- Home Loans: Deductions/Subsidy Under Section 80C, Section 24, 80EE, 80EEA, CLSS. …
- Personal Loans: Indirect Deductions as per Use of the Loan.
How can I save tax beyond 1.5 lakhs?
Recommended ways of saving taxes under Sec 80C,80D and 80EE
- Make an investment of Rs 1.5 lakh under Sec 80C to reduce your taxable income. …
- Buy Medical Insurance, maximum deduction allowed is Rs. …
- Claim deduction up to Rs 50,000 on Home Loan Interest under Section 80EE.
Can I invest more than 1.5 lakh in 80C?
There is no legal restriction on the maximum amount invested in an ELSS, though the deduction under Section 80C is limited to Rs 1.5 lakh only.
What is deductible under 80C?
Any contribution towards Public Provident Fund (PPF) can be filed for tax deduction under Section 80C. Public Provident Funds come with a maximum deposit limit of Rs. 1,50,000, allowing an investor to claim the entire deposited amount as an exemption under this Income Tax act.
How do I claim principal and interest on home loan?
In case there is Principal Repayment by you during the year (check your loan instalment details) – principal repayments are allowed to claim interest on home loan deduction under section 80 C. However, the total amount allowed to be claimed under section 80C is capped at Rs 1,50,000.
What is the exemption limit for housing loan principal?
Income Tax Benefit on Housing Loan
| Sections in the IT Act | Nature of home loan deduction | Maximum amount deductible |
|---|---|---|
| Section 80C | Deduction for principal repayment | Rs. 1.5 lakh |
| Section 24 | Deduction for interest paid | Rs. 2 lakh |
| Section 80EE | Additional interest tax benefit for first-time homebuyers | Rs. 50,000 |
How can I save income tax on my home loan?
If the loan is taken jointly, each loan holder can claim a deduction for home loan interest up to Rs 2 lakh each and principal repayment under Section 80C up to Rs 1.5 lakh each in their tax returns. To claim this deduction, they should also be co-owners of the property taken on loan.
Can we claim home loan principal be claimed before possession?
Yes, you can claim deductions on the interest paid on house loan before possession, albeit after the construction is complete and the property is ready for occupancy. However, you can only claim an amount of up to Rs. 2,00,000 in this case.
What is principal loan amount?
Principal is the money that you originally agreed to pay back. Interest is the cost of borrowing the principal. Generally, any payment made on an auto loan will be applied first to any fees that are due (for example, late fees).
What is housing loan principal?
The home loan principal amount is the amount of money initially borrowed from the lender, and as the loan is repaid, it can also refer to the amount of money still owed. If you avail a home loan of Rs. 50 lakhs, the principal is Rs. 50 lakhs.
How can I know my principal amount in home loan?
An easy way to know your home loan principal amount is to check your home loan statement. It displays information such as the initial loan amount, the amount already repaid, and the outstanding principal. You can obtain your home loan statement by visiting your nearest branch or downloading it from the customer portal.
How do you calculate principal on a home loan?
You can calculate your home loan EMI amount with the help of the mathematical formula: EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1], where, P, R, and N are the variables. The EMI value will change each time you change any of the three variables.
What is principal amount with example?
In the context of borrowing, principal is the initial size of a loan—it can also be the amount still owed on a loan. If you take out a $50,000 mortgage, for example, the principal is $50,000. If you pay off $30,000, the principal balance now consists of the remaining $20,000.
What is principal amount and interest amount?
The principal is the amount of the loan itself and the interest is the monthly amount that the lender charges you on top of the principal. With fixed-rate mortgages, your monthly payment is consistent because of a process called amortization.