Friday, 27 December 2013

Tax Exemption on Interest Paid On Housing Loan for FY 2013-14

For those who are planning to buy a home this year, tax exemption on home loan interest payment has been increased by ₹ 1 lakh in the recent budget. This is in addition to the existing exemption of ₹ 1.5 lakhs. In total, this year you can claim a deduction of ₹ 2.5 lakh for interest paid on your home loan. Along with this you can enjoy the exemption of ₹ 1 lakh on payment of principal part of home loan as usual.
But, this exemption is allowed only under the following conditions.
·      The increase in exemption limit is only for this year alone.
·      This increase in exemption limit does not apply to existing home loan takers. It is only for the loan sanctioned by the financial institutions during 1st April 2013 to 31st March 2014.
·      The loan is taken for your first home i.e., you as a taxpayer do not already own a residential property on that date.
·      The value of the property does not exceed ₹ 40 lakhs.
·      The loan amount does not exceed ₹ 25 lakh.
In Webpay, Section 80 EE: A section 80EE inserted by the Finance Minister in the 2013 Union Budget in order to promote affordable housing to the first time home loan buyers only by allowing an additional deduction of Rs 1 Lakh under section 80EE.