Housing Loan Interest Deduction

Housing Loan Interest Deduction – Housing loan interest deduction refers to the tax benefit available on the interest paid on a home loan taken to purchase, construct, or renovate a residential property. Taxpayers can claim deductions under Section 24(b) of the Income Tax Act, subject to prescribed limits, which reduces the taxable income. The Assessment Year (AY) is the year in which income earned in the preceding Financial Year (FY) is evaluated and taxed. The interest paid during a FY can be claimed as a deduction in the corresponding AY.

Example: If a taxpayer pays ₹2 lakh as home loan interest in FY 2022–23 (1 April 2022 – 31 March 2023), they can claim this deduction while filing their return in AY 2023–24