Income Tax Benefits in FY 2016-17 on Home Loan Interest

After having passed out of Business school and receiving a job in a big firm, life seems a little better with every passing day. As our pay increases and we are able to pay off our education loan, it happens to be that we are not left with many investment options besides mutual funds and shares.Lets look at this differently, we might be able to make a lot of money, but if we do not make good use of that income in way that we invest so as to receive long term benefits and tax benefits.

Read more
Save Tax
Upto ₹46,800 Under Sec 80C
Best Tax Saving Plans
  • High Returns

    Get Returns as high as 17%*
  • Zero Capital Gains tax^

    unlike 10% in Mutual Funds
  • Save upto Rs 46,800

    in Tax under section 80 C
We are rated~
6.7 Crore
Registered Consumers
Insurance Partners
3.4 Crore
Policies Sold
Get Instant Tax Receipts
Save upto ₹46,800 in Taxes Under Section 80C
We don’t spam
View Plans
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company
Get Updates on WhatsApp
We are rated~
6.7 Crore
Registered Consumers
Insurance Partners
3.4 Crore
Policies Sold

There is a very good chance by the end of the financial year we will not be able to produce many documents to claim our tax returns.

Lets consider our options besides investing in mutual funds. Well there is the extremely slow and very low yielding fixed deposits, then there are recurring deposits, post, LIC and finally there is the interest charged on property taxes or basically the EMI paid towards the same.

Lets discuss Income Tax benefits on home loan interest in FY 2016-17 in detail.

Tax Benefits on Home loan?

It is not every day that we come across such a phenomenon, where an investment that we are utilizing to the fullest ends up saving us tax as well. Give it a thought, we purchase cars, we drive them on a regular basis, but they never give us any tax benefits.

But homes on the other hand, we live in, it gives shelter to a family of many people, it is so useful and yet seems to benefit us in matters related to deduction of taxes as well. Let’s get to the details.

According to the budget announced in February 2016, first time tax payers on home loans get an additional exemption of Rs.50,000/- for interest on home loans. You are allowed a maximum of Rs.2,00,000/-, but ensure the property is self occupied and not in the name of your parents, spouse etc. The most important part of repayment on home loans though is that the repayment is divided into 2 main parts

  • Principal amount repayment
  • Interest amount repayment

When can I claim tax benefits?

To begin with, you cannot claim tax benefits during the pre-construction period, even if you have started paying the home loan EMI’s. There are chances that most likely the amount is paid but the possession is not been given for maybe a year or sometimes two.

It is very much advisable to take a home loan in the first place that will only ask you to start paying the EMI after possession. Section 24 states that there will not be any deduction if the property is still to be constructed in relation to the interest payment. You can apply for deduction of the interest charged during the pre-construction period, by availing the same after the construction is complete, in a total of 5 equal installments.

Certain Terminologies to Understand during which the Tax is applied

There are basically a couple of jargons or terms that will be thrown at you in a discussion to understand taxation for housing related matters, lets discuss the same in bit more detail,

The first and foremost jargon will be,

  • Prior period - Prior period is also known as under construction period, the term basically represents the tenure from the time you have borrowed the home loan to the end of the financial year in which the property was acquired after completing of construction. The period from borrowing of money till the construction of the house is called as pre-construction period or under construction period.
  • Prior period Interest - It is the interest charged from the date when you have borrowed the home loan to the date of the financial year that precedes the financial year when the construction was completed.

Those are more or less the 2 ways to go about the tax benefits, if you still have some doubts remaining, you can give us a call and speak with our customer service executives or a representative and he will clear out all you doubts related to interest on home loan repayment.

We strongly suggest that you discuss these matters with an expert or a representative who will be able to clear all your doubts in relation to tax benefits on home loan repayment. You can also search home loan interest deduction in income tax ay 2016-17 on the internet. You may also calculate your interest by looking out for home loan tax benefit calculator.

Let’s discuss additional tax benefits on home loans

Additional Tax Benefits under Section 80EE

Off lately the government has given additional benefits on home loan interest for up to Rs.50,000/- but to qualify for the same, we need to meet certain restrictions,

  • The tenure of the home loan taken must be in between 1st April 2016 till 31st March 2017
  • As on the date when it is sanctioned the one taking the home loan should not own any property
  • The loan must be only from a financial institution and not anywhere else.
  • The value of the house in total must be less than Rs.50,00,000/-
  • The loan amount must be less than Rs.35,00,000/-

It is only when you qualify for these terms that you will be eligible for an additional deduction of Rs.50,000/-

Lets Summarize These Terms for you 

The principal Paid

Tax Benefits

The interest Paid

Self occupied - first home

These will be no changes upto Rs. 1,50,000/- and upto Rs. 2,00,000/- in the case of senior citizens

Upto Rs.2,00,000 if paid till the end of financial year from when it was taken or else Rs.30,000/-, for further details do have a look at our website.

In the case of a first home that is rented or vacant

Again there will be no change for upto Rs.1,50,000 and in the case of seniors an amount of Rs. 2,00,000, if one is staying in a different city for work

No change on any interest paid without any limit

In the case of a second house


No change in the entire interest paid

If under construction


No change


There is no time limit on the period in which the deduction is technically allowed, it can happen anytime and one can deduct it any way.

Over and all, always remember to submit your documents on time, once you do end up submitting, make sure you have had the time to follow up with the person regarding the status of the submission.

One has to understand that it is next to impossible for the authorities to make sure that all the entries are taken care of. There may be times that they must have missed out on notifying you regarding some error in your submission.

This does not mean they are at fault and legally they will not take any responsibility in the event that you failed to rectify the error and missed out on receiving any tax benefits for the financial year. There also might be a chance that they must have notified you but, your schedule being so busy, you might have just missed out on that important mail or message.

Also remember the home loans that you take which is joint, in the name of two people you will have more deductions as compared to individual home loans.

In the event that you own more than one property and it is occupied by people who are living on rent, you can claim that the property is vacant and claim tax deductions on the same.

You can also avail for a home loan in the name of the entire family and avail for deductions, each member can benefit from the same. everyone can enjoy the benefits and it can work in everyones favour. You can look up interest on housing loan deduction for fy 2015-16 to find out more about the same and you will receive many results for the following. You can also search for section 80ee of income tax act or section 24 of income tax act to know more about the deductions you are entitled for. Look out for section 80ee for fy 2015-16 in order to know more about deduction related information and check out interest on housing loan deduction for ay 2017-18 to know more about it.

The advantage of it all is that the more you are aware of the deductions you can avail, the more are the chances that you save on money or save on taxes.

Make sure to look up our website Policy Bazaar to clarify the doubts you have about tax deduction on housing loans interest. We are always there to clarify your doubts on the same and we hope you make the right choice in relation to investments. We will also guide you with other investment related decisions and health insurance related matters.

All and all invest safely, invest in the right kind of investments that will provide you returns and exempt you from taxes in the future.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:-

Income Tax articles

Recent Articles
Popular Articles
Section 80CCC of the Income Tax

06 May 2024

Section 80CCC, part of the broader 80C category in the Income
Read more
Income Tax Proof

28 Feb 2024

Income tax proofs play an important role during tax assessment
Read more
How to Save Tax on 9 Lakhs Salary

22 Feb 2024

It is stressful to let taxes eat up your hard-earned money. This
Read more
How to Save Tax on Salary of 50 Lakhs and Above?

01 Feb 2024

Saving tax on 50 lakhs salary and above in India is important
Read more
Section 80 of the Income Tax Act

31 Jan 2024

Section 80 of the Income Tax Act, including various provisions
Read more
Deductions in New Tax Regime Under Union Budget 2023-24
There are no major changes made when it comes to deductions in the new tax regime under the recent Union Budget
Read more
What is Form 16 & How to Download It
Form 16 is a significant document provided by employers in India to their employees,  which serves as proof of
Read more
Gratuity Eligibility Before and After Completion of 5 Years
Navigating gratuity eligibility can be an important aspect of employment benefits. Understanding the criteria
Read more

Download the Policybazaar app
to manage all your insurance needs.