ITR submitting: Is it sensible to pay dwelling mortgage EMI and keep away from earnings tax outgo?

ITR submitting: Last date for Income Tax Return (ITR) submitting (thirty first March 2022) is quick approaching and incomes people are busy discovering varied methods to avoid wasting their earnings tax outgo. As dwelling mortgage EMI cost helps a taxpayer save earnings tax on as much as ₹3.5 lakh taxable earnings in a monetary 12 months, folks take a look at shopping for a house by dwelling mortgage as an possibility to save cash meant for earnings tax. However, if we go along with the views of tax and funding consultants, dwelling mortgage EMI is just not a great resolution to avoid wasting earnings tax each time. They mentioned that there are numerous different components, which a taxpayer wants to have a look at whereas shopping for a house and residential mortgage tax profit is simply a type of components.

Speaking on dwelling mortgage tax advantages; Ashish Narain Agarwal, Founder & CEO at PropertyPistol.com mentioned, “Income tax saving is an important driver in real estate purchases. However, it would be naive to just base the decision of a home purchase simply on the amount of income tax that a person saves. Buying real estate has to be an informed decision as it is a big transaction and purely from financial point of view, there are several other parameters that a buyer should bear in mind before deciding for or against the purchase. A proper cost benefit analysis involving upfront cost, mortgage cost, ownership expenses over the ownership period and expected appreciation also need to be considered and then the decision of buying versus renting should be taken.”

Home mortgage tax rebate vs earnings tax slab

Advising earnings tax payers to have a look at different tax saver choices whereas planning for his or her earnings tax return submitting; Shruti Khandare, CMO at MyFundBazaar India Private Limited mentioned, “If you are falling in income tax slab of 30 per cent, then buying a home to avoid tax is advisable. In the case of income tax slab falling around 10 per cent to 20 per cent, one should look at buying individual medi-claim for his family including his senior citizen parents. This will enable him to claim income tax exemption on annual medi-claim premium paid up to ₹75,000. Additionally, you can go for NPS investment as well as it allows an additional income tax exemption under Section 80 CCD on investment up to ₹50,000 in a financial year.”

Home mortgage tax profit calculator

Speaking on earnings tax advantages obtainable on dwelling mortgage EMI reimbursement; SEBI registered tax and funding knowledgeable Jitendra Solanki mentioned, “While paying home loan, a taxpayer can claim income tax exemption on up to ₹3.5 lakh taxable income in one financial year — up to ₹1.5 lakh exemption on home loan principal repayment under Section 80C of the Income Tax Act and up to ₹2 lakh on home loan interest repayment under Section 24(B) of the Income Tax Act. However, if the taxpayer is a salaried person, then in that case claiming home loan tax benefit of ₹1.5 lakh on home loan principal repayment becomes difficult as tax benefits under Section 80C includes other exemption like provident fund, ELSS mutual fund investments, LIC premium payment, school fee paid for children, etc.”

Home mortgage EMI calculator

Asking dwelling patrons to make use of dwelling mortgage EMI calculator whereas shopping for a house for saving cash meant for earnings tax outgo; Jitendra Solanki mentioned, “In first 4-5 years of home loan tenor, around 65 per cent of the monthly home loan EMI goes as home loan interest. So, to claim tax benefit on ₹2 lakh annual home loan interest repayment, one’s monthly home loan EMI has to be around ₹30,000. It means annual home loan EMI would be around ₹3.60 lakh. As one should keep home loan EMI below/at 40 per cent of one’s net take home income, the taxpayer’s annual take home income falls around ₹9 lakh. So, if a taxpayer is earning ₹9 lakh or more per annum, then in that case home loan EMI can be a good option to save income tax outgo.”

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