Old Tax System: Old tax system is still beneficial for home loan borrowers, know the calculation

New Tax Regime: In Budget 2025, the government has given a big relief in the new tax system. Now in the new tax regime, the basic tax exemption limit has been increased to Rs 12 lakh. That is, you will not have to pay tax on this much annual salary. For this, you will not have to claim any deduction or exemption.

New Tax Regime: In Budget 2025, the government has given a big relief in the new tax system. Now in the new tax regime, the basic tax exemption limit has been made Rs 12 lakh. That is, you will not have to pay tax on this much annual salary. For this, no deduction will have to be claimed. Most of the salaried people are directly benefited by this. But with this, many tax saving options have now become outdated. Is home loan still beneficial for those in the old tax system regime?

Deductions of the old tax system will no longer be available

In the new tax regime, HRA i.e. House Rent Allowance, LTA i.e. Leave Travel Allowance, exemptions under Section 80C like PPF and ELSS etc. and exemption on health insurance under Section 80D are no longer available. The biggest shock has been to those taking home loans. A deduction of up to Rs 2 lakh per annum is available on home loan interest (under section 24(b)). Also, a deduction of up to Rs 1.5 lakh was available under section 80C on payment of home loan principal.

Is the old system still better for home loans?

This completely depends on your income and exemptions. If your income is high and you are taking full advantage of exemptions like HRA, PPF, NPS, then the old system can still prove to be better.

If your annual income is Rs 14 lakh, then there should be a tax exemption of at least Rs 5.74 lakh (ie 41%) for the old system to prove beneficial. If your income is Rs 20 lakh, then there should be an exemption of about Rs 7.6 lakh (38%) only then the old tax system will be better.

Benefit on home loan in new tax system too

In the new tax system, there is no exemption on interest on a house occupied by oneself, but if you rent out the property, then you can get exemption on home loan interest up to the rental income received. Suppose if Naveen gets Rs 1 lakh from rent and he is paying Rs 5 lakh in interest, then he will get exemption of only Rs 1 lakh. The remaining Rs 4 lakh can be added to the purchasing cost of the property in future, which will reduce the capital gain tax while selling.

For whom is the new tax regime beneficial

If your income is low and you do not take many exemptions, then the new tax system is easy and beneficial. But if you take many exemptions like home loan, HRA, PPF, then the old system can still save you more tax.

The post Old Tax System: Old tax system is still beneficial for home loan borrowers, know the calculation first appeared on informalnewz.

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