Finance Minister Nirmala Sitharaman made big announcements for women, farmers and rural India while presenting the first budget of Modi Government 2.0. Giving great relief to the middle class, the Finance Minister has increased the income tax exemption on home loan interest from Rs 2 lakh to 3.5 lakh rupees a year. This discount will be available at the house up to Rs 45 lakhs. This discount is for the house to be bought by March 31, 2020.
Monthly Installment of Home Loans (EMI) includes both principal and interest. If you look at the details of the EMIs of home loan, you will find that in the initial years, interest is more in that and less of the principal. In the amount of money you pay to the bank as a monthly installment of home loan, you can save tax under Section 80C of the Income Tax Act on the original fund. Similarly, income tax can avail the income tax rebate under section 24 of the tax laws.
Tax deduction up to Rs 1.5 lakh per annum on the payment of principal of home loan under Section 80C is included. Also, under Section 24, there was a concession of up to Rs 2 lakh on the payment of interest in the first financial year. It has been increased by the Finance Minister to 3.5 lakhs.
In the form of monthly installment of the home loan, the amount you pay to the bank each month includes both principal and interest. If a person sees the bank's receipt, it will get a clear mention of it. Apart from this, information can also be taken by removing the tax statement from the bank's website.
It is noteworthy that in addition to tax exemption, under the Prime Minister's Housing Scheme, the beneficiaries of the loan seekers get the benefit of interest subsidy. Under this scheme, subsidy of up to 2.6 lakhs for your home loan interest rate has been extended for some time.