All in One Master of Form 16 Part B for FY 2014-15 with Tax Benefit on Home Loan: Section 24B, 80EE & 80C

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A very important criterion to be kept in mind while taking a Home Loan is the Tax Benefit on Home Loan. To explain the Tax Benefit on Home Loan, we would be dividing the Repayment of Home Loan into 2 components:-
1.                 Repayment of the Principal Amount U/s 80C Max Rs.1.5 Lakh
2.                 Repayment of the Interest on Home Loan U/s 24B & 80EE 
As the repayment comprises of 2 different components, the tax benefit on home loan is governed by different sections of the Income Tax Act and these are claimed as tax deductions under different sections while filing the Income Tax Return.

The Sections under which Tax Benefit on Home Loan can be claimed are explained below:-
Section 24B: Income Tax Benefit on Interest on Home Loan
Tax Benefit on Home Loan for payment of Interest is allowed as a deduction under Section 24 of the Income Tax Act. As per Section 24B, the Income from House Property shall be reduced by the amount of Interest paid on Home Loan where the loan has been taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property.
The maximum tax deduction allowed under Section 24B of a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs (increased in Budget 2014 from 1.5 Lakhs to Rs. 2 Lakhs).
In case the property for which the Home Loan has been taken is not self-occupied, no maximum limit has been prescribed in this case and the taxpayer can take tax deduction of the whole interest amount under Section 24B.
Please Note: In case a property has not been self-occupied by the owner by reason of the fact owing to his employment, business or profession carried on at any other place, he has to reside at that other place not belonging to him, then the amount of tax deduction allowed under Section 24 shall be Rs. 2 Lakhs only.
It is also important to note that this tax deduction of Interest on Home Loan under Section 24B is deductible on payable basis, i.e. on accrual basis. Hence, deduction under Section 24B should be claimed on yearly basis even if no payment has been made during the year as compared to Section 80C which allows for deduction only on payment basis.
Moreover, if the property is not acquired/constructed completed within 3 years from the end of financial year in which the loan was taken, the interest benefit in this case would be reduced from 2 Lakhs to Rs 30 thousand only.
Now, As per Section 24B of the Income Tax Act, tax deduction for payment of Interest would only be allowed from financial year 2011-12 on wards.  However, the Interest paid on Home Loan before the completion of Construction (i.e. Rs. 2,00,000) would be allowed as tax deduction for the next 5 Financial years @ 40,000 p.a. commencing from Financial Year 2011-12 onwards. (Easy amounts have been taken in this example for simplification purposes)
Section 80EE :- Income Tax benefits on Interest on Home Loan ( w.e.f. 1/4/2013)
As per the Budget 2013 Speech inserted a new section in the Income Tax Act which provides additional tax deduction of Rs. 1,00,000 to first time home buyers in respect of Interest on Home Loan provided that:-
1.                 The Loan is sanctioned between 1st April 2013 and 31st March 2014
2.                 The Amount of Loan sanctioned for the acquisition of Residential House Property does not exceed Rs. 25,00,000
3.                 The Value of the Residential House Property does not exceed Rs. 40,00,000
4.                 The Assessee does not own any House Property on the date of sanction of Loan
5.                 This deduction under Section 80EE is only available for Financial Year 2013-14
The Deduction under Section 80EE shall not exceed Rs. 1 Lakh and shall only be allowed for Financial Year 2013-14. However, in case where the interest payable in Financial Year 2013-14 is less than Rs. 1 Lakh, the balance amount shall be allowed as deduction in Financial year 2014-15.
In other words, in case the taxpayer has only been able to claim Rs. 40,000 as deduction whereas he was allowed a deduction of Rs. 1,00,000, the balance deduction of Rs. 60,000 which the taxpayer was not able to claim in the financial year 2013-14 can be claimed in the financial year 2014-15.
The above 3 Sections relating to Tax Benefits on Home Loans have been summarised as under:-
Quantum of Deduction (Rs.)
Self Occupied Property
Non-Self Occupied Property
Section 24B
No Limit
Section 80C
Section 80EE
                                             TOTAL = 4,50,000/-Can get tax relief 
1.                 The above tax deductions are per person and not per Property. So in case you’ve purchased a property jointly and have taken a joint home loan, each person repaying the amount would be eligible to claim whole deduction separately.
2.                 If you are living in a rented premise and are taking Tax Benefit of HRA Allowance, even then you can claim Tax benefit on home loan under Section 24B, Section 80EE & Section 80C.
For claiming the above tax deductions, you would be required to furnish the statement provided by the lender clearly indicating the amount payable and paid towards Interest and Principal. After claiming the above deductions of Tax Benefit on Home Loan, the balance Income of an Individual would be taxed as per the Income Tax Slab Rates. (Recommended Read: Income Tax Slab Rates)

Click below link to download Automated Tax Compute Sheet + Individual Salary Sheet + Individual Salary Structure + HRA Calculation  + Form 16 Part A&B and Part B for Non-Govt employees for the FY 2014-15

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