I took a home loan of ₹30 lakh for 15 years in 2014 to buy an apartment for self-occupation. Due to improving income, I repaid the home loan by August 2023 itself. For the current FY, can I take tax exemption for the lump sum (₹14 lakh) I paid to the bank to close the loan account?

Mahesh

An individual is entitled to a deduction in respect of amount repaid towards a home loan taken from specified institutions. This is the case even if the loan was repaid in full/foreclosed during the year.

However, there is a cap for deduction under section 80C. it cannot exceed ₹1.5 lakh. The deduction under section 80C for principal repayment of qualified home loan is available along with various other payments, such as life insurance premium, equity-linked savings scheme, NSC, Provident Fund, tuition fees, fixed deposit, etc. So, even if you repay ₹14 lakh you will be able to claim deduction under section 80C subject to the overall limit of ₹1.5 lakh.

I am 63 years old. My income consists of the following: Pension of ₹3 lakh; rent of ₹1.2 lakh and interest and dividend to the tune of ₹1.5 lakh, plus short-term capital gains from shares.

Hitherto, I have been filing under the old scheme. Will it be more advantageous if I opt for the new regime so that I need not invest to take advantage of the 80 C deductions? The tax liability will be nil. Am I correct?

Sujatha Rajagopal

Yes. The new regime is beneficial if the total income is ₹7 lakh or less. Assuming your capital gains are negligible, your total income reduced by standard deduction of ₹50,000 will be within ₹7 lakh. Hence, you can opt for new tax regime. As a result, there is no need to invest to take deduction under Section 80C.

The author is Partner, Deloitte India

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