First-time homebuyers can get up to Rs 3.5 lakh tax rebate. Here's the math
Home loan, education loan and electric vehicle loan are few options, that offer tax deduction under Section 80E
If you’ve exhausted all the tax-saving options under section 80C, there are other avenues also that can help you save tax over and above the Rs 1.5 lakh limit prescribed under 80C. Home loan, education loan and electric vehicle loan are few options, that offer tax deduction under Section 80E.
Here’s a lowdown on how 80E can reduce your tax liability:
Section 80 E
Under this section, interest on education loan is exempted. Taxpayers can claim deduction on education loan for self, spouse or children. The tax deduction on education loan can be availed only up to eight years after you start the interest repayment. There is no cap on the interest amount, so you get tax rebate on the entire interest.
Section 80 EE
We all know that Section 24B of the Income Tax Act allows a deduction of up to Rs 2 lakh on the home loan interest payment. However, if you have bought a house worth less than Rs 50 lakh in FY2016-17 and your home loan amount is Rs 35 lakh, you can claim an additional deduction of Rs 50,000 under Section 80EE. Hence, the total tax deduction for home loan borrowers can sum up to Rs 2,5 lakh, if they are eligible for section 80EE.
Section 80 EEA
With a view to boost affordable housing, the government introduced section 80EEA in the Finance Bill 2019. It allows a deduction of Rs 1.5 lakh on the interest payment, over and above section 24B, on affordable homes under Pradhan Mantri Awas Yojana (PMAY). The price of the house shouldn’t exceed Rs 45 lakh. Besides, this deduction is exclusive only to the first time home buyers. This means, first time home buyers can get a tax deduction of up to Rs 3.5 lakh on the interest payment, if the buy a house under PMAY.
Section 80 EEB
The rising air pollution concerns has compelled the government incentivize green mobility. A special rebate under section 80EEB has been rolled out to taxpayers who buy an electric vehicle (EV). In the financial year 2019-20, the government announced a Rs 1.5 lakh tax deduction on interest payments on EV loans. Loans issued after 1 April 2019, are eligible for this rebate.