It is best time to start your tax saving plan or planning your tax saving strategies as the financial year comes to an end. Buying a property or house can also be used to reduce the tax liability to a certain extent.
Under Section 24 of the Income Tax Act, interest paid up to Rs 1.5 lakhs per annum on a home loan can be set-off from salary or business income. In case there are co-owners to a property, each of them can claim tax benefits separately , in proportion to their share holding in the property.Co-owners can claim a deduction of up to Rs 1.5 lakhs per annum separately, on interest paid towards a self-occupied house, and also up to Rs 1 lakh per annum towards principal amount repaid.
Under Section 88 of the Income Tax Act, a home loan borrower can claim a deduction of up to Rs 1 lakh from his taxable income on repayment during the year along with specified savings instruments like provident fund. Under Section 24 of the Income Tax Act, the entire pre-EMI interest amount is allowed as a deduction equally over five years (20 percent of total interest paid per annum), starting from the year in which the construction is completed.