Definition
Section 24(b)
Section 24(b) of the Income Tax Act allows a deduction for the interest paid on a home loan, reducing taxable income under the old tax regime.
For a self-occupied house, the interest deduction under Section 24(b) is capped at a specified annual limit; for a let-out property, the rules on interest and set-off of house-property loss differ. This is separate from the principal repayment benefit under Section 80C, so a home loan can deliver tax savings on both fronts.
The benefit largely sits in the old tax regime; the new regime forgoes most such deductions, so borrowers should compare both before opting. Interest paid during the construction period (pre-possession) is generally claimable in instalments after possession. Keep the lender's annual interest certificate to substantiate the claim.
Related terms
- Section 80CSection 80C allows a deduction from taxable income for specified investments and expenses, such as EPF, PPF, ELSS, life insurance premiums and home-loan principal, under the old regime.
- Home Loan Tax BenefitsHome loan tax benefits are deductions Indian taxpayers can claim on the principal and interest paid on a housing loan, reducing taxable income under the old tax regime.
- Pre-EMIPre-EMI is the interest-only payment a borrower makes on a home loan during the construction phase, before the full EMI (principal plus interest) begins on possession.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.