Worried about paying income tax? Having a house loan can help you in grabbing taxation benefits. Investing in a home loan comes with various tax benefits that in turn helps in reducing your tax outgoings. You get tax benefits for two broader categories first being the Tax benefit as per principal repaid and tax benefits as per Interest Paid which further include four sub-heads which are self occupied, first home for rented property, Additional Property and Under Construction Property.
Income tax is the direct tax levied by the government on the income of its citizens. It is a major misconception that income only means the money earned in the form of salary by citizens, but that’s not true it rather includes income from multiple sources which include profits from business, gains or bonus from your respective profession, capital gain income, income from other sources or from house property.
As investing in a house has always been motivated by the government, therefore home loan is entitled for tax deduction (section 80C). Buying a house on a loan comes with several tax benefits that help in reducing tax outgoings.
A housing loan is initiated if you are buying or purchasing or maybe constructing a house whose construction needs to be achieved for the same financial year (within 5 yrs) when the loan was pulled.
The maximum reduction for interest payment on Self Occupied home assets is INR 2 lakhs, which was initiated from the fiscal year 2018-2019 on. This reduction can be claimed on your total earned income upto 2lakhs.
This reduction is only possible if the owner of the house or the property is living in a different city for work purposes. This reduction can be claimed upto 1,50,000 under section 80C.
The reduction on interest paid is levied on two grounds
The reduction on interest paid is levied on two grounds
If the annual limit of your property that has been completed or handed over post 5 financial year then the interest paid by you can be declared in equal parts.
Income Tax Calculator is an online process which is used to calculate your tax accountability according to the tax law. While calculating your tax there are certain factors that are taken into consideration such as your age, income, expenses, your investments, housing loan payment this is done to check the complete tax payable on income as per the old and new regime.
Your tax slab and the factors will vary depending on your tax regime. The tax calculator online is:
Step1: Firstly, choose the financial year you want to calculate your tax for.
Step2: Select your age as tax liability in India differs based on your age division.
Step3: Tap on “Go to Next Step’.
Step4: Then, enter your taxable salary, which is your salary after deducting exemptions such as LTA, standard deduction, HRA, etc.- follow this if you want to know your tax liability as per the old tax slab. But if you want to know your tax liability under the new tax slabs then you simply need to enter your salary without deducting any of the above exemptions.
Step5: You must also specify other details such as your rental income, interest income, interest paid on loan for rented and the interest on your loan for self-occupied property If any, along with your taxable salary.
Step6: Tap on ‘Go to Next Step’.
Step7: Now, if you want to calculate your taxes as per the old tax slabs, you will have to enter your tax saving investments under section 80C, 80D, 80G, 80E and 80TTA.
Step8: Then, click on calculate to know your tax liability. Here you will also be able to see a comparison between the pre-budget and post-budget tax liability which is your old and next tax slabs.
Step1: Choose the financial year for which you want to calculate the Home loan
Step2: Select your appropriate category which includes
Step3: Next, select the annual income.
Step4: Select the interest paid on your Home Loan.
Step5: Further, select the Principal Repaid on Home Loan.
Step6: After filing all the necessary slabs above you will get the result for the following:
For better understanding of the above steps let's follow an example
| Financial Year | Category | Annual Income | Interest Paid on Home Loan | Principal Repaid on Home Loan |
| 2019-2020 | Female | 50,00,000 | 5,00,000 | 10,00,000 |
Therefore,
| Total Income Tax Benefit | Income Tax Payable before Home Loan | Income Tax Payable after Home Loan |
| 1,09,200 | 13,65,000 | 12,55,800 |
Income Tax Slab is the different range of income according to which different tax rates are prescribed. The tax rate keeps on changing according to the increase or decrease of the taxpayer’s income, following such taxation helps in enabling the fair tax system in our country. These income tax slabs tend to change during every budget. There are different slab rates for different categories of taxpayers.
There are 3 categories for taxpayers according to Income Tax:
Any individual with GTI above the basic dispensing limit needs to file an income tax return but if your income is under the taxable limit then you will be able to file for a Nil Income tax return.
Entities that can file for ITR within India are:
It is vital for the taxpayer to use the right ITR form.
There are majorly two ways through which an individual file its return:
When a user uploads his/her necessary documents through E-filing of returns, it creates a database through which a user can access whenever you require.
We as humans are very used to making errors, especially when it involves computations and filing a return involves a lot of it and trying to fill these details manually can risk us in making a lot of errors due to the amount of calculations involved and this is reduced by tax calculation mechanism.
The allocation of e-filing is to make the taxpayer free from financial burdens which majorly includes calculations. So, in the absence of such a calculating tool the user tends to approach professionals from outside and hire them for the same purpose which in comparison is quite expensive so in order to save your deal there and help you to be cost efficient e-filing return helps in this online calculation mechanism.
Manual filing of return requires the user to visit the tax office which makes the process uneventful, hectic and obviously very time-consuming for the taxpayer. But using the e-filing method helps you reduce this pain by filing the return just by sitting at home in their comfort which makes it more convenient for the user.
By using the online method of filing returns the taxpayer gets the benefit of tracking status as and when the user wants. The user can keep a check on return to see if the request has been received by the Income Tax department, current status or progress of your return or even check the Income Tax refund status.
Digitalization is one such medium which has been introduced to make things for the users easy and faster. E-filing of returns allows the taxpayer to receive funds faster than he/ she could receive through the mode of manual filing under the income-tax.
Now your income tax return can be verified online through the e-verification facility. The user for the purpose should have an Aadhaar card and please note that the contact number should be the same as linked with your Aadhaar card as the One-time Password (OTP) will be sent to the same phone number.
Thus, an Income Tax Calculator is easy to use online that helps you to calculate or give an estimate of your taxes based on your income.
In case the loan on house is taken jointly then both the holders can claim a reduction in interest paid for home loan upto INR2 lakhs whereas, the principal repayment of INR 1.5lakhs for both the individuals respectively. But, it is mandatory for them to be co-partners.
Yes, if you have initiated yourself under home loan scheme then you are eligible for tax deduction on the amount paid on repayment of the principal amount on home loan upto INR1.50 lakhs as per Section 80C.
Yes, there is no restriction on the aggregate amount of homes you purchase, it is absolutely okay if a buyer wants to purchase multiple houses at a time.
