One Reply to “under which Income tax act Interest on housing loan and principal paid is exemted?”

  1. Housing loan EMI has two component Principle & Interest

    The Interest component is straight forward deducted from your taxable income

    The Principle component is eligable under 80C (maximum of one lakh rupees)

    Example: (Just for illustration) suppose in financial year 2008 2009 your total emi payment against your home loan is 70,000
    In this 70,000 there will be principle(20,000) and interest(50,000)

    This interest component (50,000) will be deducted from your taxable income

    The rest principle component(20,000) you can show in 80c section. It means that you need to invest only 80,000 rupees in your ppf, ulip, elss, insurance premium, nss, kvp etc if you want maximum tax benifit.

    Keep taxing my friend 🙂

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