The Income Tax Department of India has introduced their updated tax calculator, which is especially helpful for earning individuals. Decreed initially in 1961, the Income Tax Act of India has various provisions which offer tax benefits like exemptions and other options. Consequently, it is vital for earning individuals to note these benefits too.
However, before moving into the significant benefits offered by the Income Tax Act of India, it is advisable to note the importance of an income tax calculator. These multiplied benefits are discussed below in detail.
- Calculate the tax: Another crucial advantage of these calculators is that they allow earning individuals to check their exact amount of tax payment and exemptions. Individuals trying to understand what are the tax savings and other advantages offered on home loans and other lines of credit can easily refer to the Income tax calculator and compute their exemptions. This also allows them to plan their finances properly while reducing their overall monetary burden in loan repayment.
- Tax exemptions offered: First of the significant benefits provided by the income tax calculator is that of information to every taxable earner of India. Every individual who is taxable under the Income Tax norms of India can check their taxable incomes, as well as tax exemptions offered to them. Consequently, it is advisable for earning individuals to visit this official website of the Income Tax Department and check if they are eligible for any benefit. Additionally, these individuals can also check their necessary steps to avail these benefits.
Exemptions are offered on various aspects of a loan, including its principal amount, as well as its interest. Furthermore, there are numerous clauses and directives on tax exemption, depending on the type of loan availed by an individual.
While an income tax calculator offers these above-mentioned benefits, individuals who have availed home loans should also take note of these sections discussed below. With home loans generally involving a high credit sum, availing these benefits effectively reduces the overall repayment liability of a borrower by a considerable margin.
- Section 80C: This section of the Income Tax Act of India offers exemptions on a principal amount of a loan. Under this section, borrowers can avail tax exemption up to a sum of Rs.1.5 lakh on their loan’s principal amount. However, borrowers of home loans should also note that this exemption can be availed only once.
- Section 24: Under this section, the Income Tax Department of India offers a maximum exemption of Rs.2 lakh, which applies to the housing loan interest only. Borrowers should note though; this is only applicable if a borrower completes the construction of his/her house within a period of 5 years. If a borrower misses this timeline, they are only eligible for tax exemptions up to Rs.30,000.
Notably, these tax benefits mentioned above are also offered to individuals who have availed a top-up on their existing housing loan. Essentially, this additional line of credit is considered an extension of the primary loan, and it is included with this former line of credit as a single loan.
Potential borrowers should also note these exemptions before applying for their loan so that they can maximise on their benefits. Once they have checked all these tax saving on home loans, the application process for a loan is generally quite easy.
Additionally, along with using a home loan tax benefit calculator, borrowers should also use an EMI calculator to check their total repayment amount, as well as monthly installments. These calculators are readily available online and require details like loan amount, tenor, interest, etc. Among the various benefits of calculating EMIs before taking a home loan, a noteworthy advantage is that it allows a borrower to plan his/her financials from before. Proper planning helps individuals maintain their financial standing in the long term.