How much income tax can you save, if you take a home loan ?

How much income tax can be saved depends on your income. If you are having more than 5 lakhs income, then you can save more (than your income with less than 5 lakhs).

Tax benifits from home loan:
1. On repayment of home loan principle amount (through EMI). If you repay home loan principle amount, then it is a deduction u/s 80C up to 1 lakh per financial year. (Self occupied or for the house given on rent)

2. The interest paid on home loan is allowed as deduction u/s 24 up to 1.5 lakhs per year if the house is a self occupied one.

3. On the other hand, if the house is given on rent, then the entire interest paid in that financial year will be eligable for deduction. But you have to pay tax on rental income.

Example tax calculation for self occupied house:

8,00,000 *Your income in the FY: 8,00,000
1,00,000 *Home loan principle in FY: 1,25,000 (Max.1 lakh)
1,50,000 *Home loan int. in FY: 2,00,000 (Max Rs.1.5 lakhs)
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5,50,000 net taxable at slab rates:

Tax Calcu. for MALE -Tax free Amt. Rs.110000FY:07-08

550,000 = Net Total income taxable as per slab rates
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000,000 = Tax @ 0% On TAX FREE Amt. Rs. 110,000
004,000 = Tax @10%: 1.1 to 1.5 lakhs on Rs. 040,000
020,000 = Tax @20%: 1.5 to 2.5 lakhs on Rs. 100,000
090,000 = Tax @30%: On > 2.5 Lakhs on Rs. 300,000
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114,000 = TAX PAYABLE on net Income Rs. 550,000
003,420 = ADD: Edu. cess @ 3% on tax Rs. 114,000
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117,420 = Net Total Tax Payable. (with home loan benifits)
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If you have no savings from home loan, then your tax will be:

Tax Calcu. for MALE -Tax free Amt. Rs.110000FY:07-08

800,000 = Gross Total Income (Taxable At Slab Rates)
000,000 = LESS: Deductions U/Chapter IV-A (80C Etc.,)
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800,000 = Net Total income taxable as per slab rates
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000,000 = Tax @ 0% On TAX FREE Amt. Rs. 110,000
004,000 = Tax @10%: 1.1 to 1.5 lakhs on Rs. 040,000
020,000 = Tax @20%: 1.5 to 2.5 lakhs on Rs. 100,000
165,000 = Tax @30%: On > 2.5 Lakhs on Rs. 550,000
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189,000 = TAX PAYABLE on net Income Rs. 800,000
005,670 = ADD: Edu. cess @ 3% on tax Rs. 189,000
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194,670 = Net Total Tax Payable. (without home loan)
=======

Net Saving: 194670-117,420 = Rs. 77,250

maximum 30.90 % on interest on housing loan up to Rs. 150000. means tax saving of Rs. 46350/- if yr salary is less than Rs10 lacs per annum

refer this link..

http://economictimes.indiatimes.com/Feat...

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