What are the key benefits of SBI Credit Cards?

SBI Credit Cards offer a wide range of benefits, including rewards, cashback, lounge access, discounts, and insurance coverage.

How can I apply for an SBI Credit Card?

You can apply for an SBI Credit Card online through the Paisabazaar platform, where you can compare card options and check for pre-approved offers.

What factors should I consider when choosing an SBI Credit Card?

Consider your spending habits, lifestyle, and financial goals to select a card that best suits your needs, such as travel, shopping, or rewards.

How can I manage my SBI Credit Card efficiently?

SBI Card offers a user-friendly mobile app and online banking services to help you manage your card, check statements, make payments, and access additional features.

What precautions should I take to avoid accumulating credit card debt?

Responsible credit card usage includes paying bills on time, managing credit limits wisely, and avoiding unnecessary spending to prevent debt accumulation.

Home Loan Tax Benefit - How To Save Income Tax On Your Home Loan?

Acquiring a home is a significant financial decision, often involving a substantial loan. Fortunately, under the Income Tax Act, 1961, homeowners can benefit from several tax deductions that can alleviate the financial burden of home loans. By understanding and utilizing these tax benefits, you can significantly reduce your taxable income and, consequently, your tax liability. Here’s a comprehensive guide on how to maximize tax benefits associated with home loans.

Impact of the New Tax Regime on Home Loan Benefits

The introduction of the new tax regime has impacted the way home loan benefits are applied. Under the previous tax regime, taxpayers could claim various deductions related to home loans without restrictions. However, the new tax regime curtails some of these benefits. Here’s a detailed breakdown:

Deductions under Section 80C: Claims for principal repayments, stamp duty, and registration charges are not available under the new tax regime. Sections 80EE and 80EEA also do not apply.

Interest Deductions under Section 24(b): While the old regime allowed for deductions on interest payments for both self-occupied and let-out properties, the new regime restricts these benefits. Specifically, deductions for self-occupied properties are not available under the new tax regime. However, interest deductions on let-out properties remain, although any resulting loss can only be set off against income from other house properties, not against other income sources like salary.

Deduction for Interest Paid on Housing Loan under Section 24

To benefit from deductions under Section 24, the home loan must be used for purchasing or constructing a residential property. If the loan is used for construction, the construction must be completed within five years from the end of the financial year in which the loan was taken.

Self-Occupied Property: For the assessment year 2018-19 and onwards, the maximum deduction for interest on a home loan for a self-occupied property is capped at Rs 2 lakh per year.

Let-Out Property: There is no upper limit for claiming tax deductions on interest for let-out properties. This means that you can claim a deduction for the entire interest paid on your home loan for let-out properties.

Delayed Construction: If the construction extends beyond the stipulated five years, you can only claim interest deductions up to Rs 30,000 for the financial year.

Pre-Construction Interest: If you paid interest during the pre-construction period, you can claim it as a deduction in five equal instalments starting from the year the construction is completed. The total deduction for pre-construction interest is capped at Rs 2 lakh, including the interest paid in the current year. For example, if you paid Rs 1,20,000 in interest during the year and Rs 2.4 lakh in pre-construction interest, you can claim a total deduction of Rs 1,68,000, combining Rs 1,20,000 as current year interest and Rs 48,000 as 1/5th of the pre-construction interest.

Section 80EEA: If eligible, you can claim an additional deduction of Rs 1.5 lakh over and above the Rs 2 lakh cap under Section 24(b). More details on Section 80EEA are discussed later in this guide.

Deduction on Principal Repayment under Section 80C

Under Section 80C, the principal repayment of a home loan is eligible for tax deduction. The maximum deduction allowed is Rs 1.5 lakh per annum.

Conditions: To qualify for this deduction, the property must not be sold within five years of possession. If the property is sold before this period, the previously claimed deductions will be added back to your income in the year of sale.

Deduction for Stamp Duty and Registration Charges under Section 80C

In addition to principal repayment, you can also claim deductions for stamp duty and registration charges under Section 80C, subject to the overall limit of Rs 1.5 lakh. These deductions can only be claimed in the year these expenses are incurred.

Additional Deduction under Section 80EE

Section 80EE offers an additional deduction of up to Rs 50,000 for first-time homebuyers, provided the following conditions are met:

Loan Amount: The loan amount should be Rs 35 lakh or less.

Property Value: The value of the property should not exceed Rs 50 lakh.

Loan Sanction: The loan must have been sanctioned between April 1, 2016, and March 31, 2017.

First-Time Buyer: The individual must not own any other house on the date of loan sanction.

Additional Deduction under Section 80EEA

Introduced in the Budget of 2019 to boost the housing sector, Section 80EEA provides an additional deduction of up to Rs 1.5 lakh. To claim this benefit, the following conditions must be met:

Property Stamp Value: The stamp value of the property should be Rs 45 lakh or less.

Loan Sanction Period: The loan must be sanctioned between April 1, 2019, and March 31, 2022 (this deadline has been extended).

First-Time Buyer: The taxpayer should not own any other house on the date of loan sanction.

Exclusivity: The taxpayer should not claim a deduction under Section 80EE if claiming benefits under Section 80EEA.

Deduction for Joint Home Loan

If a home loan is taken jointly, each co-borrower can claim deductions for interest and principal repayment:

Interest Deduction: Each co-borrower can claim a deduction of up to Rs 2 lakh for interest on the home loan under Section 24(b).

Principal Repayment: Each co-borrower can claim a deduction of up to Rs 1.5 lakh under Section 80C for principal repayment.

For these deductions, the co-borrowers must also be co-owners of the property. Joint loans with family members or friends can help maximize the tax benefits.Summary of Home Loan Tax Benefits

Principal Portion of Loan Repayment (Section 80C):

Maximum Deduction: Up to Rs 1.5 lakh.

Conditions: The property should not be sold within five years of possession. If sold before this period, the previously claimed deductions will be added back to your income in the year of sale.

Interest Incurred During the Year (Section 24(b)):

Maximum Deduction for Self-Occupied Property: Up to Rs 2 lakh.

Conditions: The loan must be taken for purchasing or constructing a residential property, and the construction must be completed within five years from the end of the financial year in which the loan was taken. There is no upper limit for interest deductions on let-out properties. Pre-construction interest can also be claimed, subject to an overall limit of Rs 2 lakh, combining current year interest and pre-construction interest.

Interest Incurred During the Year (Section 80EE):

Maximum Deduction: Up to Rs 50,000.

Conditions: The loan amount should be Rs 35 lakh or less, and the property’s value should not exceed Rs 50 lakh. The home loan should be sanctioned between April 1, 2016, and March 31, 2017. The taxpayer must not own any other house on the date of loan sanction.

Interest Incurred During the Year (Section 80EEA):

Maximum Deduction: Up to Rs 1.5 lakh.

Conditions: The stamp value of the property should be Rs 45 lakh or less. The loan must be sanctioned between April 1, 2019, and March 31, 2022. The taxpayer should not own any other house on the date of loan sanction and should not claim deductions under Section 80EE.

Stamp Duty and Registration Fees (Section 80C):

Maximum Deduction: Up to Rs 1.5 lakh.

Conditions: This deduction can be claimed only in the year these expenses are incurred.Loss under the Head House Property

If you do not let out your house property, you might incur a loss under the head ‘House Property’ due to the interest deductions claimed under Section 24(b). This loss can also occur if you rent out the property, as there is no limit on interest deductions, and your interest payments might exceed your rental income.

Set Off Limits: You can set off the overall loss of up to Rs 2 lakh against other heads of income, such as salary. Any loss exceeding Rs 2 lakh can be carried forward for up to 8 years and claimed against future income from house property.