Query on Home Loan and Income tax.

POSTED BY [email protected] ON March 1, 2013 9:55 pm COMMENTS (5)


I have a home loan of 20 Lacs with monthly repayment instalment of abt 20k.

I will get possession in May 2013.

1. Am i entitled to get Tax benefit of 1 lakh (80C) plus 2.5 lakh(section 24), after I get possession?(As per new budget)

2. Is there any part of Home Loan that I can show under Section 80 C?

3. Could you clarify how is the Income tax calculated. Taking reference as Gross salary 6.4 Lacs for a male 26 yrs and how can the tax be minimised?





5 replies on this article “Query on Home Loan and Income tax.”

  1. Dear AB, the tax calculation ‘ll be like this –

    Total income = 6.5L Rs. Say your non taxable allowances are 25000 Rs.

    so gross taxable income = 650000 – 25000 = 625000

    Loss on house property (Home loan interest benefit) = 150000
    So taxable income after 24(b) benefit = 625000 – 150000 = 475000
    Tax saving under chapter VIA (not only 80C, but 80D, 80E & many others are included here) = 100000 (your own case)
    So net taxable income = 475000 – 100000 = 375000

    Zero tax slab = 200000
    So tax @ 10% = (375000 – 200000)* (10/100) = 17500
    Cess @ 3% on tax = 17500*0.03 = 525
    Hence net tax liability = 18025 Rs.



  2. AB says:

    I read somewhere that it will be applicable only for loans sanctioned after Ist April 2013 🙁

    Can you comment on the method of tax calculation in my above post. Is it correct?

  3. Dear AB, please wait for some time till notification of these proposals by Govt. of india after the budget is passed in parliament. If the things pan out as per your understanding, I w’d be happy.



  4. AB says:

    Thanks Ashal.

    The cost of house is 34 lacs.

    Are you sure about section 24(b)? The way I interpret it from the budget, it should be like — from the coming fiscal year, we can show 2.5 L under instead of 1.5 L. i.e say someone took the loan in 2012 and got possession as well in 2012 and is currently claiming 1.5 L under 24(b), the same person can now claim 2.5 L from April 2013. Please see if it makes any sense .

    Regarding Tax calculation, i just want to know how is it calculated. I think its this way:

    If the annual sal is 6.5L, the
    First 2 L, no tax.
    If I am able to show my 1L and 1.5L investments under 80 C and 24(b), then again no tax on 2.5L.
    So my taxable income should be 6.5 – (2 + 2.5) = 2 Lacs minus (some allowances like HRA,medical, LTA etc )
    And the tax amount should be 10% of this taxable income.

    Please correct me if I am wrong.


  5. Dear AB, what’s the cost of your house? In my personal opinion, as you had already booked your flat before this new tax benefit, you are not entitled for it. So your benefit is limited to normal 80C – 1L Rs. & 24(b) 1.5L Rs.

    The principal part repaid by you through your EMIs ‘ll be available for tax benefit under section 80C within the over all limit.

    For detailed calculation of your tax, please provide other details also. Like Home loan interest, principal repayment, PF, PPF & other tax saving investments.



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