Income Tax Deduction U/s.80C for repayment of Housing Loan

In respect of deduction available U/s.80C for repayment of housing loan, the following points has to be kept in mind.Deduction for house loan /installment available up to Rs 150000/- under section 80C (earlier limit was Rs.100000 /-)

  1. The limit of Rs 150000 as above is total limit u/s 80C for all type of savings ,plus section 80CCC(pension policy) plus u/s 80CCD – Contributory pension Plan.  Means the aggregate amount of deduction under above referred sections can not exceed Rs. 1,50,000.
  2. The payment of loan should be made towards cost of purchase/construction of new residential house property.
  3. The house property income should be assessable in the hand of assessee in simple term assessee should be the owner of the house property. The house loan should not be for addition or alteration to, or renovation or repair of house property
  4. House consturction must be completed before the end of the previous year. Completion of house means
    1. completion certificate in respect of the house property by the authority competent to issue such certificate or
    2. house property or part has been occupied by the assessee or any other person on behalf of assessee or
    3. has been let out;
  5. Housing loan benefit for more than one house can also be claimed.
  6. All the benefit of tax u/s 80C will reversed if house property is sold within 5 years from purchase of house property.
  7. The tax benefit under section 80C is available on residential house property only and not available on commercial house property.
  8. Loan should be taken from Specified institutions/dept only as given below
    1. Central or State Government
    2. any Bank including co-operative bank
    3. LIC or National Housing Bank
    4. public company formed and registered in India or co-operative society with main object to provide long term finance for construction purchase of houses in India.
    5. Assessee’s Employer if public company or public sector company or university established by law or a college affiliated to such university or local authority or co-operative society.
  9. The benefit is available only to Individual assessee and to HUF assessee.
  10. The benefit is available on payment basis ,no matter to which year payment is relates to or payment overdue or not.
  11. From total amount of installment paid of house loan reduce amount availed under deduction section 24 (interest)
  12. The Benefit under this section is available whether residential house property is rented or self occupied, but house must be completed by the end of the previous year in which deduction is to be claimed .
  13. Pre EMI paid in a financial year are also eligible for deduction if house property is completed by the end of the financial year.
  14. Stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee is also eligible for deduction under this section even assessee has not taken any loan .
  15. There is no requirement that for loan ,house property must be mortgaged to the institution from where the loan has been taken ,but it should be used for the purpose of purchase /construction of house property.

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