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Does your home, saving your income tax? Buying a house for self occupation can be biggest tax saving instrument. It saves your income tax in two ways. You can save maximum Rs 75750 per year on your home.
Introduction:
There are two main benefits which are available under Income Tax Act, 1961 in relation to Purchase or Construction of House Property which are described as under:
The house property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount payable towards interest on borrowed capital is allowed as deduction under u/s 24(b) of the Income-tax act.
(a) In case property is acquired or constructed with capital borrowed on or after 01-04-1999 and such acquisition or construction is completed within 3 years of the end of the financial year in which the capital was borrowed:
Minimum of Actual Interest payable or Rs 1, 50,000/- .
(b) In case property is acquired or constructed with capital borrowed
Minimum of Actual Interest payable or Rs 30,000/- .
Interest payable on barrowed capital for the previous year is allowed as deduction under U/s 24(b).
Any payment made for purchase or construction of a residential house property which is chargeable to tax under the head “Income from House Property” towards any installment or part payment due to any Bank, Financial Institution, Company or Co-Operative Society towards the cost of the house property allotted to him is allowed as deduction U/s 80 C of the Income Tax Act, 1961 to the extent of Rs. 1,00,000 along with other Specified Investments mentioned under Section 80 C of the Income Tax Act, 1961.
The amount you pay as stamp duty or registration fee when you buy a house can be claimed as deduction under section 80C in the year of purchase of the house.
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