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Can I claim Income Tax benefit on the amount which I spent for loan approval

I am constructing a home for which I applied for plan approval that cost me nearly 1 lac. Are there any tax benefits available for the same? Kindly advise?

Jun 16, 2016 by Pradeep, Chennai  |   Taxation

No you will not get any Income Tax benefit on the amount spent for loan approval.

Income tax benefits are available on the principal and interest amount paid on monthly EMIs for the home loan if it is a self occupied property. Please read the following –

  • Under Section 80C of the Income Tax Act, you get tax benefit on Home Loan (Principal Amount) upto Rs. 150,000 per annum provided the construction is complete and you have received the completion certificate. This tax deduction is the total of the deduction allowed under Section 80C which includes investment in PPF amount, ELSS mutual Funds, Insurance premiums, EPF contribution and NSC etc.

  • Under Section 24 of the Income Tax Act, payment of Interest upto Rs. 200,000 per annum is allowed in case of a self occupied property. However, if the property is not self occupied, no maximum limit is prescribed and the tax deduction can be availed on the whole interest amount under this section (subject to fulfilling certain conditions)

  • If you are a first time buyer of a house, you can additionally claim Rs. 50,000 for interest on home loan under Section 80EE. This is over and above of the tax rebate of Rs. 200,000 under section 80C for payment of interest. Please note that this is effective from Financial Year 2016-17 provided the property purchased is less than Rs. 50 Lacs and loan amount is less than Rs. 35 Lacs. Also, the loan sanction date should be between 1st April 2016 to 31st March 2017
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