Tax Benefit on Home Loan Interest & Principle F.Y. 2017-18 ,With Automated 100 employees Master of Form 16 Part B for F.Y.2017-18

According to the budget proposed on Feb 29th, 2016, one can avail the Income Tax exemption on a home loan. Basically, the first time home buyer can get income tax benefits on housing loan by claiming a number of deductions. The latest Budget Update states that the first time home buyers are going to get an additional exemption of Rs. 50,000/- for interest on home loan under section 80EE from assessment year beginning from 1 st April 2017 and subsequent years.

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To understand the key tax benefit on a home loan, we are bifurcating the repayment techniques into four major elements- tax benefits on principal repaid, tax benefits on interest paid, deduction on pre-construction interest and section 80EE income tax benefits. The next section will let you know the concept of all in detail.

Tax Benefits on Principal Re-paid

Under section 80C of the Income Tax Act, the maximum deduction allowed for the repayment of the principal amount of home loan is Rs. 1.5 lakh. Deduction under section 80C also includes investments done in the PPF Account,  Equity Oriented Mutual funds, Tax Saving Fixed Deposits, National Savings Certificate, etc. subject to the maximum of Rs. 1.5 lakhs.

Besides this, there are stamp duty and registration charges that one can claim under the aforementioned section. Though, the claim can only take place in the year in which the payment has been made.

Nevertheless, there’s a condition under which this repayment of the principal amount of housing loan is allowed. The deduction is only possible after the house gets entirely completed and there is a completion certificate for the same. Any under construction structure is not going to be a part of this section.

Tax Benefits on Interest Paid

Under section 24 of the Income Tax Act, one can avail the deduction on Home Loan for payment of Interest tax benefit. The self-occupied property allows the deduction with the maximum limit of Rs. 2 lakh if it takes the completion within 5 years from the end of the Financial Year, otherwise Rs. 30,000.

From Assessment year 2018-19, the loss from house property that will be allowed to be set off from other heads of income will be restricted to Rs 2,00,000 in particular assessment year and the rest amount shall be carried forward for set-off in subsequent years.

Deduction on Pre-construction Interest

One can also get a pre-construction interest claim from the financial year just like availing the deduction for interest that can be claimed when the construction completes at the starting of the same year. In five uniform installments, you can deduct the claim, combining up the whole pre-construction interest. Nevertheless, the amount should not be deducted beyond Rs. 2 Lakh in the case when you use it for your own place.

Section 80EE Income Tax Benefit

Section 80EE proposes an additional deduction of Rs.50000 in respect of interest on housing loan to the first time house owners who own the house of Rs.50 lakh or less and has acquired the loan amount of less than or equal to Rs.35 lakh. For this, the loan should be sanctioned between April 1, 2016, and March 31, 2017.This deduction shall be in addition to Rs.2 Lakhs allowed under section 24(b) of the Income Tax Act, 1961.

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Rebate u/s 87A of the Income Tax as per Budget 2017, Plus Automated TDS on Salary for Govt & Non-Govt employees For F.Y 2017-18 and Automated Form 16 Part A and B and Part B for F.Y.2017-18 and A.Y.2018-19

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Finance Act 2013, has introduced the new section, namely Section 87A. This newly inserted section gives rebate up to a maximum of Rs. 2500/- to the assessee having Net Total Income Less than Rs. 3,50,000/-(Rs. Three Lakes Fifty Thousand ). The rebate under this section is available to the resident Individuals for the  A.Y. 2018-19. ( As per the Finance Budget 2017-18)

“87A An assessee, being an individual resident in India, whose total income does not exceed Three Lacs & Fifty Thousand rupees(3.5 Lakh), shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deduction under this chapter i.e. Chapter VIA) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred percent of income-tax or an amount of two thousand & Five Hundred (2.500/-) rupees, whichever is less.”

Conditions required to be fulfilled:

·                     The rebate is allowed only to the individual assesses (not to HUF/Firm/AOP/BOI)

·                     The individual should be resident in India

·                     Total income should be up to or less than Rs. 3,50,000/-. Total Income here means Income under all heads of Income (Salary, House property, Business & Profession, Capital Gain and Other sources) after deducting the deduction under Chapter VI i.e. deduction from 80C to 80U.

·                     No deduction is available to Super Senior Citizens whose age is more than 80 years.

Quantum of Rebate:

The rebate will be the lower of

·                     100% of the tax payable on Total Income; or

·                     Rs. 2,500/-

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Automated 100 employees Form 16 Part A and B for F.Y.2017-18 and A.Y. 2018-19 as per new Tax Slab for F.Y.2017-18,With Income Tax Rebate Under Section 87A for F.Y 2017-18

Check out the Section 87A rebate for FY 2017-18  in the following section. The Income Tax Rebate under Section 87A for AY 2018-19 is allowed as per the following schedule for different Financial Years. 

The Union Budget 2017-18 proposed to be reduced to this rebate under section 87A to Rs. 2,500, where the total taxable income does not exceed Rs. 3,50,000 from AY 2018-19.

Know all about Section 87A: Income Tax Rebate allowed to Individuals in the following section.

Financial Year	Rebate Amount	Applicable only if income less than
2017-18	Rs. 2500	Rs. 3.50 Lakhs

Section 87A of Income Tax Act, 1961 offers a Tax Rebate to Individuals earning Income below the specified limit. This 87A Rebate would be given from the Total Tax payable by an Individual. The Rebate under section 87A is relevant to note here that this rebate is to be subtracted from the Total Taxable income and not from the Total Income of an Individual. Learn the essentials of Income Tax Rebate. Know all about Section 87A. Check Tax Rebate for the Individuals for Assessment year 2017-18. For more details regarding Income Tax Rebate under Section 87A, read the full article. 

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What is Income Tax Rebate?

A Tax rebate is an amount paid by way of reduction, return, or refund on what has already been paid or contributed. The Income Tax Rebate in India is allowed for Individuals whose income falls under the tax slabs. Tax rebate rates are updated for every financial year as per the directions of the Indian government. The modifications made in the rebate structure are announced in Union Budget of the respective year.

Eligibility for Income Tax Rebate

With a view providing tax relief to the individual assesses who are in lower income bracket a refund is provided for under Section 87A.

The rebate will be available if the assessee satisfies the following eligibilities.

1.         The Taxpayer is a resident individual( may be an ordinary resident or not ordinary resident).

2.         The Total Income or taxable income (i.e. gross total income minus deductions under Section 80C to 80U) is Rs.3,50,000/- or less.

Income Tax Rebate Key Features

The following are the salient features of Income Tax Rebate u/s 87A AY 2017-18.

·             Under Section 87A Tax Rebate is only available to Individuals. All categories of Individuals whether female or male or Senior Citizens are eligible to claim Income Tax Rebate as per Section 87A. The taxpayer under the class like HUF, LLP, Partnership Firms, Companies, LLP, etc. is not eligible to claim Income Tax Rebate under this section.

·             Income Tax Rebate u/s 87A is only available to Resident Individuals and not to Non-Resident Individuals.

·             For Super Senior Citizen (Aged above 80 years) There is no benefit of this Rebate as their Income up to Rs. 3,50,000/- is already exempted from the levy of Income Tax.

Note: Rebate under Section 87A is not available for the case of a non-resident individual, resident or non-resident HUF/ AOP/ BOI or any taxpayer other than a resident individual.

Tax Rebate for Senior Citizens

The Income Tax Act, 1961 has made provisions for tax rebates for senior citizens(aged over 65 years). The Section 88B contains all details about such tax rebates. But, the most significant fact about such rebates is that the individual concerned is entitled to receive rebates till Rs. 20,000/- depending upon the amount of tax payable on him.

Note: Rebate benefits u/s 87Ais not available to super senior citizens.

Income Tax Rebate Calculation

As Section 87A provides for Income Tax Rebate, the assessee will first compute the Total Tax Payable and then reduce Rs. 2,500/- from this Tax payable provided his Total Income is less than Rs. 3,50,000/-. If taxpayer’s Total Income is more than Rs. 3,50,000/-, then he won’t be able to claim income tax rebate under Section 87A.

·             The Net Taxable Income of Rs. 3,50,000/- is the total of incomes under all heads i.e. House Property, Salary,  Capital Gains, Business or Profession,  and Other Sources.

·             In case, there is any loss under any head due to the payment of housing loan or for any other reason, such loss would also be deducted from the total income.

·             Tax Deductions from Section 80C to Section 80U under Chapter VI-A would also be allowed, and the resultant figure i.e. Total Income should be less than Rs. 3,50,000/- for an individual to claim income tax rebate of Rs. 2,500/- under Section 87A.

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