According to the budget proposed on Feb 29th, 2016, one can avail the Income Tax exemption on a home loan. Basically, the first time home buyer can get income tax benefits on housing loan by claiming a number of deductions. The latest Budget Update states that the first time home buyers are going to get an additional exemption of Rs. 50,000/- for interest on home loan under section 80EE from assessment year beginning from 1 st April 2017 and subsequent years.

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To understand the key tax benefit on a home loan, we are bifurcating the repayment techniques into four major elements- tax benefits on principal repaid, tax benefits on interest paid, deduction on pre-construction interest and section 80EE income tax benefits. The next section will let you know the concept of all in detail.
Tax Benefits on Principal Re-paid
Under section 80C of the Income Tax Act, the maximum deduction allowed for the repayment of the principal amount of home loan is Rs. 1.5 lakh. Deduction under section 80C also includes investments done in the PPF Account,  Equity Oriented Mutual funds, Tax Saving Fixed Deposits, National Savings Certificate, etc. subject to the maximum of Rs. 1.5 lakhs.
Besides this, there are stamp duty and registration charges that one can claim under the aforementioned section. Though, the claim can only take place in the year in which the payment has been made.
Nevertheless, there’s a condition under which this repayment of the principal amount of housing loan is allowed. The deduction is only possible after the house gets entirely completed and there is a completion certificate for the same. Any under construction structure is not going to be a part of this section.
Tax Benefits on Interest Paid
Under section 24 of the Income Tax Act, one can avail the deduction on Home Loan for payment of Interest tax benefit. The self-occupied property allows the deduction with the maximum limit of Rs. 2 lakh if it takes the completion within 5 years from the end of the Financial Year, otherwise Rs. 30,000.
From Assessment year 2018-19, the loss from house property that will be allowed to be set off from other heads of income will be restricted to Rs 2,00,000 in particular assessment year and the rest amount shall be carried forward for set-off in subsequent years.
Deduction on Pre-construction Interest
One can also get a pre-construction interest claim from the financial year just like availing the deduction for interest that can be claimed when the construction completes at the starting of the same year. In five uniform installments, you can deduct the claim, combining up the whole pre-construction interest. Nevertheless, the amount should not be deducted beyond Rs. 2 Lakh in the case when you use it for your own place.
Section 80EE Income Tax Benefit

Section 80EE proposes an additional deduction of Rs.50000 in respect of interest on housing loan to the first time house owners who own the house of Rs.50 lakh or less and has acquired the loan amount of less than or equal to Rs.35 lakh. For this, the loan should be sanctioned between April 1, 2016, and March 31, 2017.This deduction shall be in addition to Rs.2 Lakhs allowed under section 24(b) of the Income Tax Act, 1961.