EMI on Home Loan & Its Impact on Income Tax Computation

• July 6, 2020
• CA Chandan Agarwal's Office

EMI on Home loan has two components. One component is repayment towards principal amount of loan and the other is interest portion. The article will describe regarding the tax benefit an assessee can avail on making payment of EMI. Loan can be taken for construction or purchase or repair or renewal or reconstruction of residential house or unit/flat.

(i) Tax benefit in regard to principal component of EMI

An Individual or HUF can get a benefit upto Rs. 1,50,000/- in a year under Section 80C of the IT Act, 1961 by way of deduction from taxable income.  To get the deduction, EMI has actually to be paid by the assesse on or before the last date of the previous year.

Consequence of transferring the house or unit/flat before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by assessee.

Read more on: https://taxguru.in/income-tax/emi-home-loan-impact-income-tax-computation.html