Home Loan

Home Loan – A home loan is a financial loan taken from a bank or financial institution to purchase, construct, or renovate a residential property. For income tax purposes, interest paid on a home loan and principal repayment may qualify for tax deductions under relevant sections of the Income Tax Act. The Assessment Year (AY) is the year in which income earned in the preceding Financial Year (FY) is evaluated and taxed. Taxpayers can claim deductions related to home loans in the AY corresponding to the FY in which the interest or principal payments were made.

Example: If a taxpayer pays interest on a home loan during FY 2022–23 (1 April 2022 – 31 March 2023), the eligible deduction is claimed in AY 2023–24 while filing the income tax return.