If you’ve taken a home loan under the Pradhan Mantri Awas Yojana – Credit Linked Subsidy Scheme (PMAY-CLSS), you can also enjoy certain tax benefits. What are those? Read on to find out.
Tax benefits under PMAY-CLSS
The PMAY-CLSS was introduced in 2015 to encourage people to live in ‘pucca’ homes in urban areas. Under the scheme, you can get an interest subsidy of up to 6.5% on home loans.
However, there’s more to the scheme than just subsidised home loan interest rates. You can also avail of tax benefits on the principal and interest portion of your home loan EMI.
The Indian government offers a reduced GST of 8% instead of the standard 12% for a house purchased under the scheme.
Under Section 80C of the Income Tax Act (ITA), you can claim tax exemption on the principal amount for a maximum amount of Rs. 1.5 lakhs per financial year.
For senior citizens, the cap is set at Rs. 2 lakhs. If you have a joint house loan, each co-applicant can apply for the principal amount tax benefit individually. However, the total amount claimed by all co-applicants cannot exceed the total principal amount paid on loan in the financial year.
Besides this, there are also other tax benefits you can claim depending on various conditions. Under Section 24(b), if the house is self-occupied, meaning if you are not renting out the property, you can claim a tax exemption of up to Rs. 2 lakhs per financial year on the interest component you paid on the loan.
Like Section 80C of the ITA, if you’ve taken a joint loan, all the co-applicants can avail of this tax benefit individually.
Moreover, under Section 80EE, you can claim a tax deduction of Rs. 50,000 on the interest component (after exhausting the condition of Section 24(b)) per year if you fulfil these conditions:
- The house you purchased is valued at Rs. 50 lakhs or less.
- The loan you took to buy the house is Rs. 35 lakhs or less and was sanctioned by a financial institution.
- You are a first-time house buyer.
- You purchased the residential property between 1st April 2016 to 31st March 2017.
Under Section 80EEA, you can claim a tax exemption for a maximum amount of Rs. 1.5 lakhs on the interest component per financial year if you fulfil the below-given conditions:
- The stamp duty value of the house is Rs. 45 lakhs or less
- The carpet area is less than or equal to 60 sq. metres for metropolitan cities and 90 sq. metres for other cities and towns.
- The real estate project was approved after 1st September 2019.
PMAY-CLSS offers an array of benefits in the form of subsidies and tax exemptions. So, if you are looking to invest in your first house, check your home loan eligibility under the scheme and use a home loan EMI calculator to estimate your projected monthly instalments. Doing so will help you plan a budget effectively.