If you’ve taken a home loan, you can avail tax benefits both on interest payment as well as principal repayment. U/s 80C of the I-T Act, you can claim a tax deduction of up to Rs 1.5 lakh for the principal repaid during the financial year.
You may also include the amount paid for stamp duty and registration charges to claim deductions u/s 80C, subject to prescribed ceiling limit.
And you can further claim a deduction of up to Rs 2 lakh for the interest paid on a home loan during the financial year u/s 24.
The deduction benefit is also available on the interest incurred during the pre-construction period which can be claimed in five instalments after completion of the project, subject to a prescribed overall deduction limit of Rs 2 lakh.
Many people need to take the help of an education loan to fund their higher studies.
However, an education loan can also be used to reduce your tax liability.
U/s 80E, the entire interest paid for an education loan during a financial year can be deducted from the taxable income to reduce your tax liability to that extent.
Do note that the tax deduction benefit u/s 80E is only available to individuals and Hindu Undivided Families are not allowed to claim this benefit.
It is also important to mention here that the tax benefit is available for an education loan taken for self, children, and spouse.
Also, the loan should only be taken from qualified banks, financial institutions or charitable trusts.
The tax deduction u/s 80E is available for a period of up to 8 years or until repayment of the entire loan amount, whichever is earlier.