The repayment of the principal of your home loan will not be eligible for tax deduction under the DTC. The people who are paying large home loan EMIs and claim benefits under Sec 80C may have to find the money for other tax-saving investments after the DTC comes into effect. But this setback is minor when compared with the gain from the removal of tax on notional rent.
Right now, people who own more than one house have to pay tax on notional rental income even if the second house is lying vacant. Paying tax on your earnings is bad enough, but having to pay tax on the income you haven’t received is worse. The DTC will end this anomaly and make investments in second homes more tax-efficient. Another landlord friendly move is that advance rent received from a tenant will be taxed in the year to which it relates, not when it was received. In some cities, landlords take up to 6-12 months rent in advance, which pushes up their tax liability. The DTC has fixed this too.
Similarly, by retaining the tax benefits on the interest paid on a home loan the DTC has helped cushion some of the impact of rising interest rates. The tax benefits reduce the effective cost of the home loan, thus making it affordable for borrowers.
Sir,
I have purchased a house under housing loan scheme, but it is not occupied by me , neither i have given it for rent, as , i am working in another place , and i am paying a huge interest on the loan, so my query is , can i get tax benefit for whole interest what i am paying if i rent the house?