The Income Tax Act of 1961 has a number of provisions for a tax rebate on house loans. The three key areas where such a borrower might seek exemptions are as follows:

• Under Section 80C of the ITA, principal repayment of house loans can result in yearly tax deductions of up to Rs.1.5 lakh.
• According to Section 24 of the Income Tax Act, you can claim tax deductions of up to Rs.2 lakh on house loan interest payments.
• If you are a first-time homeowner, Section 80EE allows you to claim extra tax deductions of up to Rs.50000. This deduction is applied to the interest payments on the loan.

The Income Tax Act of 1961 has a number of provisions for a tax rebate on house loans. The three key areas where such a borrower might seek exemptions are as follows:

• Under Section 80C of the ITA, principal repayment of house loans can result in yearly tax deductions of up to Rs.1.5 lakh.
• According to Section 24 of the Income Tax Act, you can claim tax deductions of up to Rs.2 lakh on house loan interest payments.
• If you are a first-time homeowner, Section 80EE allows you to claim extra tax deductions of up to Rs.50000. This deduction is applied to the interest payments on the loan.

Remember that tax deductions are based only on your taxable income, not your net profits.

Individuals earning more than Rs.2.5 lakh per year, for example, were subject to income tax under the previous regime.

Consider that your annual salary is Rs.4 lakh. In such a situation, home loan benefits will be available only on your taxable income of Rs.1.5 lakh, not on your total yearly earnings.

Home Loan Tax Deductions Under the Old and New Regimes

The Union Budget 2020 suggested a tax framework that decreases existing tax bracket rates. Furthermore, many of the exemptions and tax-saving features included in the current taxing approach are no longer available under this new regime.

Home loan borrowers who decide to switch to this new regime should be aware of what to expect in terms of deductions depending on loan payback.

Under Section 24 of the ITA, taxpayers servicing a home loan for a self-occupied property will no longer be able to claim an income tax benefit on interest payments under the new tax regime. As a result, such a restriction limits your prospective tax savings by up to Rs.2 lakh.

Individuals who rent out the property in issue, on the other hand, would still be eligible for a tax credit on home loan interest. These individuals can still benefit in the following ways:

The standard deduction is equal to 30% of net rental revenue. You may calculate your net rental revenue by deducting the property's total rental income from the relevant municipal taxes.

Individuals can claim house loan tax advantages on interest payments once the standard deduction has been established, according to Section 24b of the Income Tax Act.

You can opt to follow the tax benefits of the previous regime in order to take advantage of house loan tax exemptions and a number of other features.

What is a Tax Benefits Calculator for Home Loans?

A house loan tax benefit calculator is a specialized online tool that may assist you in calculating your tax deductions as you repay such loans.

Even after learning about numerous tax-saving options, it might be difficult for taxpayers to calculate accurate deductions. This can also include lengthy and intricate computations.

A tax benefit calculator, on the other hand, delivers quick results. It may be used to calculate the actual tax liabilities before and after the home loan benefits are deducted.

Factors Influencing Home Loan Tax Deduction Calculation

The tax benefit calculator computes your income tax liabilities based on the information you submit.

Year of Assessment - This is the year for which you are attempting to calculate your income tax liabilities.

Annual Earnings - One of the most essential factors in determining tax liability is the amount of money you make in a year. Whether you choose to assess taxes under the old regime or under the new regime, an income of up to Rs.2.5 lakh per year is tax-free. Only income in excess of this amount is subject to taxation at the appropriate rates.

Amount of Interest Paid - Next, enter the total interest paid on your home loan during the assessment year. This information is important for determining your Section 24 deductions.

Category - An assessee might be classified as male, female, senior citizen, or super senior citizen. Keep in mind that senior persons and super senior citizens pay a different tax rate than anyone under the age of 60.

Amount of Principal Repayment - In the following field, enter the total amount of home loan principal repaid throughout the assessment period. This information is required to calculate your Section 80C tax advantages.

When you enter all of these facts into the calculator, three important pieces of information will be shown.

For starters, it will show the amount of tax owed without taking into account the home loan perks.

Second, taxpayers would learn about their responsibilities after taking into account the various tax-saving measures for home loan borrowers.

Finally, a separate part will go through how much tax you save as a result of your house loan payments.

The Advantages of Using a Tax Benefits Calculator for a Home Loan

Calculations are quick - A person would have to perform long manual calculations to determine his tax deductions from house loan payments. Most individuals find this time- consuming and difficult. Taxpayers can better understand their responsibilities if they have access to a tax benefit calculator. Furthermore, customers may calculate how much money they will save on tax payments as a result of their existing house loan installments.

The results are always accurate - A single error in these calculations might jeopardize your tax payment arrangements. When it comes time to pay your bills, you may discover that you have more responsibilities than you thought. You may use a home loan tax benefit calculator to avoid similar complications in the future. It eliminates the possibility of errors or inaccuracies, providing you with knowledge of your true tax responsibilities after applying for any relevant tax refunds.

An Easy-to-Use Layout - Thanks to a simplified interface, using such a calculator is quite straightforward. Even those who have never used such an internet tool before will feel at ease while utilizing it for the first time. As a result, such a calculator assures that an assessee has as few hassles as possible while checking liabilities.

These are some of the most compelling reasons to use this calculator tool before filing your taxes.

Apart from home loan advantages, keep in mind that the evaluation of tax liabilities includes a number of additional deductions and exemptions.

Although this calculator can calculate savings based on your home loan conditions, it cannot calculate further tax savings through other sources.

A house loan not only allows you to purchase the property you want but also lowers your income tax obligations.

However, as a borrower, you must verify the actual tax refund on a house loan based on your eligibility, principle payments, and interest dues.