Home loan tax benefits

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					You can save significant part of your tax liability if you have taken a home loan. Here's
how it works:

Interest paid on the home loan

As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 150,000 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 March 1, 1999). The interest payable
for the pre-acquisition or pre-construction period would be deductible in five equal
annual installments commencing from the year in which the house has been acquired or

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).

Principal repayment of the home loan

As per the newly introduced Sections 80C read with section 80CCE of the Income Tax
Act, 1961 the principal repayment up to Rs. 100,000 on your home loan will be allowed
as a deduction from the gross total income subject to fulfillment of prescribed conditions.
Let us consider a hypothetical example.

Your taxable Income: Rs 5,50,000

Principal repayment for the same year: Rs 1,10,000 and Interest payable for the year : Rs

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 ICICI 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

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Description: This document explains about the tax benefits we get on home loans.