The overall tax revenue collected by the Government of India amounted to Rs. 22.7 Crore in the financial year 2018-19, as per the Union Budget 2019. A stipulated portion of such revenue has to be repaid to the public filing for income tax returns under several clauses of the Income Tax Act of 1961. Salaried individuals with an annual income that is within Rs. 50 Lakh can claim such returns through the submission of an ITR-1 Form using Form 16. Subsequently, individual employees can also use an income tax calculator to get a clear picture of the total amount receivable by them.
What are income tax calculators?
Income tax calculators use relevant data like annual income, investments and outstanding loans to determine the total tax that an individual is liable to pay. It also displays total tax saving on a home loan, and other credits under the Income-tax Act of 1961.
Provisions for tax waivers on a home loan can be listed as follows-
- Principal – Section 80C
Homeowners can claim income tax exemption of up to Rs. 1.5 Lakh on annual salary spent on home loan principal repayment under Section 80C. An in-depth idea about this clause helps save tax when you take a home loan.
- Interest – Section 24 and 80EEA
For houses purchased for residential purposes, the total tax waiver amounts up to Rs. 2 Lakh for income spent on housing loan interest. In case of properties purchased for commercial purposes or rent, individuals can claim tax exemptions on the entire income spent on interest payments under Section 24 of the Income Tax Act.
Additionally, for first-time buyers, a further exemption of up to Rs. 1.5 Lakh is given on interest payments under Section 80EEA. Nonetheless, for residential purchases, the acquisition of the property should be completed before March 2020. The overall value of the property should not exceed Rs. 45 Lakh as well. Such tax savings and associated advantages are offered by home loans today.
How to use an income tax calculator?
Potential borrowers of housing loans can easily access a income tax calculator on the website of their chosen financial institutions. The following details have to be inputted carefully for the display of accurate results –
- Step 1– Enter the current fiscal year for tax determination.
- Step 2 –Key in your age and total taxable salary. Allowances such as house rent allowance, transportation benefits, and other provisions have to be deducted from the basic salary to determine the total taxable salary.
- Step 3 –Enter details of revenue generated from interest and rental income, if any.
- Step 4 –Provide details of any investments made under Section 80C, 80D, 80E, and 8TTA.
- Step 5 –Click on the ‘Calculate’ tab for an instantaneous display of results.
Such tax benefits on home loans are extended to borrowers to reduce their financial burden while purchasing a house. Nonetheless, a salaried employee needs to meet the stipulated criteria for successful disbursal of the loan amount in his/her name.
Eligibility criteria for salaried workers –
- The ageof the applicant should be between 23 and 62 years.
- A documented work experience of a minimum of three years. Submission of salary slips or Form 16 for this purpose.
- Applicants should have a CIBIL score of at least 750 or above.
Along with these, the salary of an individual is also taken into account to determine his/her ability to make timely EMI payments. The proportion of salary spent on such EMI payments is eligible for a tax deduction; the precise amount of which can be obtained via an income tax calculator for optimal financial planning.