22 MARCH, 2022

Buying a home is often one of the most important dreams for many. Similarly, saving taxes is something everyone strives for. Interestingly, with a home loan, you can achieve both. With a home loan, you can fulfill your dream of buying the best home and save taxes. Availing tax benefits on your home loan can help you save money and manage your finances effectively.

However, the big question is, how do you know how much tax you can save from a home loan? Is there an option where you just put in the numbers and get your answer? Yes. Search no more; here is an easy solution for you. The home loan tax benefit calculator.

 

How Much Tax Can You Save On Home Loans

You can save taxes on home loans by availing the following deductions. You can claim tax deductions on the principal and interest component of the loan.

 

  • Tax benefit on the principal amount

You can claim a tax deduction of up to Rs 1.5 lakhs on the principal amount you pay for the home loan. You can claim this deduction under section 80C of the Income Tax Act, 1961. The deduction of the principal amount also includes stamp duty and registration amount.

 

  • Tax deduction on interest

The interest component of the home loan is a significant part of the overall loan amount. You can claim deduction on the interest repayment of up to Rs 2 lakh under section 24(b) of the Income Tax Act, 1961.

 

  • An additional tax deduction of up to Rs 50,000 is available for first time home loan borrowers on the interest payment under section 80EEE. To claim this deduction, the loan amount should be less than Rs 35 lakh, and the house value should be under Rs 50 lakh.

 

What is a home loan tax benefit calculator?

 

A home loan tax benefit calculator is an online computation tool that you can use to determine your taxability after considering all deductions. With a tax benefit calculator, you can factor in the home loan deductions and find out the tax you need to pay.

 

You can use the calculator with the following steps:

  • Go to the lender’s website and click on the tax benefit calculator online
  • Enter the financial year to determine your taxability
  • Choose your gender - male or female
  • Enter your annual income
  • Enter the eligible investments under section 80C
  • Enter the home loan amount
  • Enter the loan tenure and home loan interest rate
  • Your results will be displayed instantly

 

A home loan tax benefit calculator can help you determine the tax value you can save by repaying the home loan. You can calculate the values of savings made by home loan repayment, tax before home loan and tax after home loan by using this calculator. It is a user-friendly and convenient means to determine the amount of tax you would save by repaying the home loan.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.