How to Claim Tax Benefits on HDFC Home Loan Interest Under Section 24(b)

Buying a home is a major financial milestone, and if you’ve taken out an HDFC home loan, you can benefit not only from homeownership but also from significant tax benefits. Under Section 24(b) of the Income Tax Act, you are eligible to claim deductions on the interest paid on your home loan, reducing your tax liability. In this article, we’ll explain how to claim these tax benefits and maximize your savings.

1. What is Section 24(b)?

Section 24(b) allows you to claim a tax deduction on the interest component of your HDFC home loan repayment. This provision applies to both self-occupied and rented properties, making it an attractive tax-saving option for homeowners and investors alike.

Key Benefits:

• For self-occupied properties, the maximum deduction available is up to ₹2 lakh per year.
• For properties that are rented out, there is no maximum limit on the interest deduction, although the overall loss from house property that can be set off against other income is capped at ₹2 lakh.

2. Conditions for Claiming Tax Benefits Under Section 24(b)

To claim the tax deduction on your HDFC home loan interest, certain conditions must be met:

• The loan must have been taken for the purpose of purchasing, constructing, or renovating a house.
• The deduction is only available for the interest portion of the EMI, not the principal repayment.
• The construction of the property must be completed within 5 years from the end of the financial year in which the loan was taken.
• You must provide a certificate from HDFC stating the total interest amount paid during the financial year.

3. How to Calculate the Tax Deduction

The amount of deduction you can claim under Section 24(b) depends on several factors, including the nature of your property and the amount of interest paid during the financial year. Here’s a step-by-step guide on how to calculate your deduction:

For Self-Occupied Properties:

1. Calculate the total interest paid on your HDFC home loan during the financial year.
2. If the total interest is less than or equal to ₹2 lakh, you can claim the entire amount as a deduction.
3. If the interest paid exceeds ₹2 lakh, you can only claim up to ₹2 lakh.

For Rented-Out Properties:

• You can claim the entire interest paid as a deduction, but the loss from house property that can be set off against other income is capped at ₹2 lakh.

4. Documents Required for Claiming Tax Benefits

To claim the deduction on your HDFC home loan interest, you’ll need to submit certain documents while filing your income tax return. These include:

1. HDFC Loan Interest Certificate:

• HDFC provides an interest certificate at the end of each financial year, detailing the total interest paid. This certificate is essential for claiming your deduction under Section 24(b).

2. Proof of Loan Disbursement:

• Keep a copy of your loan sanction letter and proof of loan disbursement for tax filing purposes.

3. Proof of Property Ownership:

• Ensure you have a valid sale deed or ownership documents for the property purchased with the home loan.

5. Steps to Claim Tax Deduction Under Section 24(b)

Follow these steps to claim the tax deduction on your HDFC home loan interest when filing your income tax return:

1. Collect the Interest Certificate: Obtain the interest certificate from HDFC, which states the interest amount paid during the financial year.
2. Include the Deduction in Your ITR: While filing your Income Tax Return (ITR), include the interest paid in the Income from House Property section.
3. Submit Relevant Documents: Attach the interest certificate and any other required documents to your ITR.
4. Verify and File: Review the details carefully before submitting your ITR. Ensure that the interest amount is correctly reflected to avoid any discrepancies.

6. Additional Tax Benefits on HDFC Home Loans

In addition to the deduction under Section 24(b), you can claim further tax benefits on your HDFC home loan under the following sections:

Section 80C:

• You can claim a deduction of up to ₹1.5 lakh on the principal repayment of your home loan under Section 80C.

Section 80EE:

• First-time homebuyers can claim an additional deduction of up to ₹50,000 on the interest paid under Section 80EE if the loan amount is ₹35 lakh or less and the property value is ₹50 lakh or less.

Section 80EEA:

• For home loans sanctioned between April 1, 2019, and March 31, 2022, you can claim an additional deduction of up to ₹1.5 lakh on the interest paid if you meet certain conditions related to the property’s value and loan amount.

7. Expert Tips to Maximize Your Tax Benefits

Here are a few strategies to help you get the most out of your HDFC home loan tax benefits:

Combine Section 24(b) and Section 80C:

• If you’re repaying both interest and principal, claim deductions under both Section 24(b) and Section 80C to maximize your tax savings.

Ensure Timely Construction Completion:

• Make sure the construction of your property is completed within 5 years to be eligible for the full ₹2 lakh deduction under Section 24(b).

Apply Early:

• The sooner you apply for an HDFC home loan and start paying interest, the more tax benefits you can claim in the following financial years.

Conclusion: Claim Your Tax Benefits and Save Big

With the provisions of Section 24(b), you can significantly reduce your tax burden by claiming deductions on the interest paid on your HDFC home loan. By understanding the eligibility criteria, keeping the necessary documents ready, and filing your tax return correctly, you can make the most of these benefits.

Make sure to claim your HDFC home loan interest deduction each financial year to enjoy continuous savings on your taxes.