Guide to Claiming Home Loan Interest in Your ITR

Home loans can sometimes take a toll on your financial stability, but they also have an upside. You can lighten the burden by understanding how to claim home loan interest in ITR. The Indian Tax Law permits homeowners to deduct the amount paid as interest on a home loan when calculating taxable income under section 24(b). This considerable exemption stands at Rs. 2 lakhs for self-occupied properties.

Steps to Claim Home Loan Interest in ITR

1. Start by aggregating all the home loan interest payment receipts for the fiscal year.

2. When filing your ITR, you must declare your gross total income (GTI). Your GTI includes income from all heads: salary, house property, capital gains, business & profession, and other sources.

3. In the “Income from house property” section, declare the net annual value of your property, i.e., the rent earned, or the self-occupied property’s value as zero.

4. Deduct the standard deduction, i.e., 30 percent of the annual value and the interest on borrowed capital. Enter the total paid annually under “Interest payable on borrowed capital.”

5. After submission, the total amount will be deducted from your taxable income.

Documents Needed for Claiming Home Loan Interest in ITR

To claim this tax benefit, you will need home loan documents, including the home loan certificate that banks issue at the end of the financial year, presenting a breakdown of your loan EMI into principal and interest components. You can easily access these documents through your Home Loan App.

Conclusion

Claiming your home loan interest in your ITR is a beneficial way to reduce your tax liabilities legally. Being aware of how to claim home loan interest in your ITR and possessing the needed documents can streamline tax planning and ease the logistics of your annual tax filing. Remember to keep clear records and consult with a tax professional to ensure accurate filing.