Home loan borrowers enjoy dual tax benefits under the Income Tax Act. One, on the Principal Amount repaid and the second, on the Interest paid. These benefits are also available for loans taken for additions and altercations of the house and Commercial property. Tax Rebate IT Act Sections The tax rules relating to home loan rebates are governed under the Income Tax Act, 1961 and its amendments under the following Sections:- (a) Section 80 C Applicable to Principal Amount Repayment. (b) Section 24 Applicable to Interest Payment. (c) Section 80 EE Additional Amount of Rs 50,000 Interest Payment (effective from 01 April 2016 onwards ). First Time House Buyers and the House is Self Occupied (a) Under Section 80 C The Principal amount repaid towards home loans, enjoys tax rebate under Section 80 C. But this amount is limited to the maximum of Rs.1.5 lakhs (Rs 2 lakhs for Senior Citizens) clubbed with all other investments like PPF, Insurance etc. Therefore, this benefit gives relief to the loan seekers to subscribe lesser amount towards investments being made to reach the limit of Rs 1.5 lakhs thereby leaving more money in their hands to repay the Equated Monthly Installments (EMIs). Stamp Duty and Registration Charges The Amount paid as Stamp Duty & Registration Charges are also allowed as tax deduction under Section 80C. But these can be claimed only in the year in which they were paid. (b) Under Section 24 The Interest amount paid to the banks/NBFCs enjoy tax rebate Under Section 24. The maximum limit of this exemption is up to Rs 2 lakhs (Rs 2.5 lakhs for Senior Citizens). If the property is not completed or acquired within 05 years from the end of the Financial Year in which the loan was taken, then the amount of interest qualifying for rebate will be Rs 30,000 only.

2. Sections for Tax Benefit on Home Loan
Home loan borrowers enjoy dual tax benefits under
the Income Tax Act. One, on the Principal Amount
repaid and the second, on the Interest paid. These
benefits are also available for loans taken for
additions and alterations of the house and
Commercial property.

3. Tax Rebate IT Act Sections
The tax rules relating to home loan rebates are governed
under the Income Tax Act, 1961 and its amendments under
the following Sections:-
(a) Section 80 C
Applicable to Principal Amount Repayment.

4. (b) Section 24
Applicable to Interest Payment.
(c) Section 80 EE
Additional Amount of Rs 50,000 Interest Payment (effective
from 01 April 2016 onwards ).

6. IMPORTANT
There are, however, variations in Tax benefits
rules for the first time house buyers and the
second/multiple house buyers. These benefits
not only reduce your tax outgo but also help you
in managing your cash flows better.

8. First Time House Buyers and the House is Self Occupied
(a) Under Section 80 C
Stamp Duty and Registration Charges
(b) Under Section 24
Pre-EMI Interest
(c) Under Section 80 EE
Note: You can claim the above mentioned exemptions only when you are in
possession of your house Or house has been completed.

10. Tax benefits for Joint Home Loan Borrowers
In the case of home loans taken on joint names,
both the borrowers are treated as separate
entities for the purpose of tax benefits. They
enjoy above mentioned benefits independently
but both the individuals need to repay the loan.

11. First House Buyers but the
House is Rented Out/Lying
Vacant

13. Second Home Buyers (One Self Occupied and the Other Rented Out)
For the self occupied house, the non taxable
amount will be restricted to the limits mentioned
above but for the second property entire interest
amount can be claimed as deduction, without any
capping under Section 24 (b). But the benefit of
Section 80 C will not be applicable for the second
house. The rent earned will be taxable.

14. Second Home Buyer (Both Are Rented Out)
In cases where both the houses are rented
out, then full deductions on Interest paid
on both home loans is allowed against such
incomes. Rental income earned from both
the houses will be taxable.

16. Proofs Required for Availing Tax
‘Certificate of Interest’ from the banks/NBFCs stating your
Principal amount repaid and the Interest amount paid over the
period of complete Financial Year. However, in order to ensure
that your employer does not deduct Tax at Source (TDS), you
need to obtain a copy of the ‘Provisional Certificate of Interest’ at
the beginning of the Financial Year and hand it over to your
employer.

17. Conclusion
Loans are a great liability on any borrower as its massive and the repayment
tenure is long. It should be taken based on your financial needs. But it gives the
borrower a great advantage in saving taxes under the Income Tax Act . Even
loans taken for commercial/industrial property, additions, altercations also enjoy
the tax benefits. Above all, loans give an opportunity to the borrowers to create
wealth with borrowed money.