Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Invest

Insurance and Investment in one plan.

Kotak e-Term

Protect your family's financial future.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals.

Kotak T.U.L.I.P

A plan that works like a term plan, and Earns like ULIP Plan.

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family.

Kotak Assured Pension

A plan that offers immediate or deferred stream of income

Kotak Lifetime Income Plan

Retirement years are the golden years of life.

Kotak Guaranteed Savings Plan

A plan that offers long term savings and life cover.

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

What is Section 24 in the New Tax Regime?

Section 24 in the new tax regime offers limited benefits for homeowners paying loans towards their self-occupied property.

  • 3,803 Views | Updated on: Apr 15, 2024

If you want to avail yourself of tax benefits on home loans, Section 24 of the Income Tax Act, 1961 is for you. It generally allows for claiming deductions on interest paid toward home loans. However, its applicability differs in the new tax regime compared to the old regime.

Key Takeaways

  • Section 24 of the Income Tax Act addresses the deduction available on interest paid on housing loans, offering relief to taxpayers by reducing their taxable income.
  • Taxpayers have the flexibility to choose between the old and new tax regimes, directly influencing the eligibility and deductions available under Section 24.
  • Section 24 offers deductions for interest paid on self-occupied, let-out, or deemed let-out properties.
  • Taxpayers can claim a deduction of up to ₹2 lakh on interest paid for self-occupied properties, irrespective of construction status.
  • Taxpayers must maintain accurate documentation of home loan transactions to claim deductions effectively and avoid penalties or legal issues.

In the ever-evolving field of taxation, it is crucial to stay updated with the latest amendments and provisions. One such provision that has garnered attention in recent times is Section 24 in the new tax regime. To avail of the tax deduction from income from house property you have to understand the implications under Section 24 of the Income Tax Act.

Understanding Section 24 of the Income Tax Act

Section 24 of the Income Tax Act of 1961 deals with the deduction available on interest paid on housing loans. It provides relief to taxpayers by allowing them to claim deductions on the interest component of their home loan repayments. However, it is important to note that the provisions of Section 24 have changed the new tax regime.

What are the Key Changes in the New Tax Regime?

With the introduction of the new tax regime, there have been significant alterations to the provisions of Section 24. Some of the key changes include:

Standard Deduction vs. Itemized Deductions

Under the previous tax regime, taxpayers could claim deductions under various sections, including Section 24, by opting for itemized deductions. However, the new tax regime offers a standard deduction instead of itemized deductions, thereby affecting the applicability of Section 24.

Optional Regime

Taxpayers now have the option to choose between the old tax regime and the new tax regime based on their preferences and financial circumstances. The choice of regime directly impacts the eligibility and quantum of deductions available under Section 24.

Lower Tax Rates

The new tax regime offers lower tax rates but limits the availability of certain deductions and exemptions, including those under Section 24. Taxpayers need to weigh the benefits of lower tax rates against the reduced deductions under the new regime.

Applicability of Section 24 in the New Tax Regime

Despite the changes introduced in the new tax regime, Section 24 continues to play a significant role in providing tax relief to homeowners. Here is how Section 24 applies in the new tax regime:

Deduction on Self-occupied Property

In the case of a self-occupied property, taxpayers can claim a deduction of up to ₹2 lakh on the interest paid on the home loan under Section 24. This deduction is available irrespective of whether the property is under construction or already constructed.

Deduction on Let-out or Deemed Let-out Property

For properties that are let-out or deemed to be let-out, taxpayers can claim a deduction for the entire interest paid on the home loan. There is no upper limit on the deduction under Section 24 of the Income Tax Act for let-out properties.

Additional Deduction for Affordable Housing

In addition to the regular deduction under Section 24, taxpayers purchasing affordable housing properties may be eligible for an additional deduction of up to ₹1.5 lakh on the interest paid on the home loan. This additional deduction is subject to certain conditions and criteria.

Impact on Taxpayers

The changes in Section 24 and the introduction of the new tax regime have implications for taxpayers, especially those with housing loans. Here is how taxpayers are affected by this change:

Choice of Tax Regime

Taxpayers need to evaluate whether it is beneficial for them to opt for the old tax regime with higher deductions under Section 24 or the new tax regime with lower tax rates but reduced deductions.

Financial Planning

Homebuyers need to factor in the tax implications of their housing loans while planning their finances. Understanding the deductions available under Section 24 can help taxpayers make informed decisions regarding their investments and tax-saving strategies.

Compliance and Documentation

Taxpayers must ensure compliance with the provisions of Section 24 and maintain accurate documentation of their home loan transactions to claim deductions effectively. Any discrepancies or non-compliance may lead to penalties or legal issues.

Wrapping it Up

Section 24 in the new tax regime has undergone significant changes, impacting the deductions available on housing loan interest. Taxpayers must familiarize themselves with these changes and assess their implications on their tax liabilities and financial planning. By understanding the applicability of Section 24 and making informed choices between the old and new tax regimes, taxpayers can optimize their tax-saving strategies and achieve better financial outcomes.

FAQs


1

How important is compliance with Section 24 provisions for taxpayers?

Complying with Section 24 is crucial as it ensures proper tax deductions for home loan interest.



2

What documentation is required to claim deductions under Section 24?

To claim deductions, documents like loan sanction letters, interest certificates, and property ownership proof are required.



3

Can taxpayers claim deductions under Section 24 for properties under construction?

Deductions for under-construction properties are limited until completion within 5 years.


4

Are there any limitations or restrictions on claiming deductions under Section 24?

Limits apply depending on property occupancy and the regime chosen (the new regime excludes self-occupied deductions).

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

Kotak Guaranteed Fortune Builder

Download Brochure

Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.

  • Guaranteed@ Income Benefit for upto 25 years
  • Flexibility to choose income period
  • Premium break for females on child birth or any listed specific illnesses
  • Life cover for the premium payment period
  • Enhance your life cover with rider offerings

ARN. No. KLI/23-24/E-BB/1201

T&C

Download Brochure

Features

  • Increasing Life Cover*
  • Guaranteed^ Maturity Benefits
  • Enhanced Protection Through Riders
  • Tax Benefits
  • Dual Benefits: Guaranteed^Maturity + Death benefits

Ref. No. KLI/22-23/E-BB/999

T&C

Buy Online

- A Consumer Education Initiative series by Kotak Life

Kotak Guaranteed Fortune Builder Kotak Guaranteed Fortune Builder

Kotak Guaranteed Fortune Builder

Guaranteed Income for bright financial future

Invest Now
Kotak Assured Savings Plan Kotak Assured Savings Plan

Kotak Assured Savings Plan

Guaranteed Lumpsum returns for achieving life goals

Invest Now
Kotak Guaranteed Savings Plan Kotak Guaranteed Savings Plan

Kotak Guaranteed Savings Plan

Achieve your long-term goals and get life cover

Invest Now