There are double tax benefits associated with home loan for Resident Indians-
- Repayment of the Principal Amount
- Repayment of the Interest on Home Loan
One can get a Tax rebate under section 80C of the Income Tax Act on whole amount repaid by him in a financial year, maximum upto Rs. 1,50,000/- each financial year (Increased from 1 Lakh to Rs. 1.5 Lakh in Budget 2014).
Tax Benefit on Home Loan for payment of Interest is allowed as a deduction under Section 24(1) of the Income Tax Act. One is eligible for a Tax Rebate of maximum of Rs. 2 lakh per financial year for home loan interest paid by him/her during that financial year.
This home loan can be taken for any purpose like Purchase/ Repair/ Construction/ Renewal/ Reconstruction of a Residential House Property etc.