The brand-new Tax Regime (NTR), brought in by the government in 2020, delivered a major shift in the way individuals plan their taxes. While it simplified tax slabs and reduced tax charges, it also took away many conventional deductions and exemptions, leaving many taxpayers confused—particularly about domestic loan hobby blessings.
So, can you still declare a tax exemption on your home loan interest if you select the new tax regime? The answer is sure—however, there is a seize! Let's recognize the entire info.
New Tax Regime vs. Old Tax Regime: What is the important difference?
In the antique tax regime, taxpayers loved various deductions beneath sections like 80C, 24(b), and 80EE/80EEA, which include deductions on home mortgage primary and hobby bills.
In contrast, the new tax regime, to begin with, removed most deductions, providing only decreased tax prices and a few select allowances.
Here is a brief evaluation:
Details of the antique regime New Regime (updated)
General Deduction ₹50,000 ₹75,000 (2023 update)
Phase 80C (principal repayment) is to be had now, not to be had.
Segment 24(b) (hobby on domestic mortgage) up to ₹2 lakh now not to be had (with an exception)
Phase 80EE/EEA (extra interest benefit) to be had Merged/Closed
Absolutely, the brand-new tax regime simplifies tax filing but limits traditional deductions. But there's an exception with regard to the domestic loan hobby.
How can you claim domestic loan interest exemption in the new tax regime?
Whilst you can not immediately declare a deduction underneath segment 24(b) for a self-occupied residence, you can claim a benefit if your house is set free (rented).
Here's how it works:
If the residence for which you have taken a loan is rented out (let out belongings), the hobby paid on the home loan may be adjusted towards the rental income.
You could file a net loss of as much as ₹2 lakh beneath the pinnacle "profits from residence assets," even beneath the brand-new tax regime.
example to understand higher:
Home loan interest paid: ₹300,000
Condominium earnings acquired: ₹100,000
Net loss: ₹200,000 (₹300,000 - ₹100,000)
You may prompt this ₹2 lakh loss against your different taxable earnings, for that reason lowering your usual tax liability.
Critical Rule: Even if your real hobby is better (say ₹5 lakh), the set-off is constrained to ₹2 lakh per year as per authorities norms.
Key Takeaways:
Self-occupied domestic: No direct exemption for domestic loan hobby in the new tax regime.
Rented (permit-out) assets: You may declare the set-off of internet loss up to ₹2 lakh.
Restriction on Set-Off: Handiest ₹2 lakh per economic 12 months, no matter how much better the actual hobby paid.
Why don't we forget the New Tax Regime notwithstanding constrained deductions?
The up-to-date New Tax Regime (2025) now gives:
Full tax exemption on as much as ₹12 lakh in taxable profits (after widespread deduction and rebate).
Lower tax prices as compared to the vintage regime.
Easier submitting process with fewer documentary necessities.
Thus, when you have let-out belongings, you may still smartly use the home mortgage interest benefit in the New Tax Regime without switching again to the vintage one.
The new tax regime may additionally seem restrictive at first glance, but with proper planning—mainly if you have apartment earnings—it can provide sizeable tax savings.
However, person cases may additionally range. Therefore, it's highly recommended to consult an economic marketing consultant or tax professional earlier than making your very last decision.
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