A rise in early tax filings began this month after the Income Tax Department confirmed the ₹2 lakh yearly interest deduction under Section 24(b) in its April 2024 guidance note for self-occupied homes.

A simple question is being discussed again. Can a home loan help save tax when earnings stay tight and EMIs rise each year. This question returned strongly after the CBDT published its updated FAQ on 12 July 2024. The document stated that no interest deduction is allowed for a self-occupied property under the new tax regime. That rule pushed many borrowers back to the old regime.

A related article published in LoansJagat, July 2025 explained how first-time buyers depend on Section 80EEA. The article mentioned Section 80EEA, which allows an extra ₹1.5 lakh annual deduction on interest for affordable housing loans. The same report cited for approval-period trends under the rule.

These changes shaped the discussion on how to use home loan tax benefits and how to save tax on home loan payments for FY 2024-25.

What Are Home Loan Tax Benefits?

Home loan tax benefits are law-based deductions that help reduce taxable income. These cover interest paid to banks, principal repaid, stamp duty, and certain charges linked to home purchase. Three sections form the base:

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Section 24(b) for interest
Section 80C for principal
Section 80EEA for extra interest relief

These limits guide the filing process. Before looking at the table, it helps to recall that these deductions apply only when the old regime is chosen.

Component	Section	Maximum Deduction	Source
Interest on self-occupied home	24(b)	₹2 lakh yearly	Income Tax Dept. FAQ 2024
Principal repayment	80C	₹1.5 lakh yearly	Income Tax Dept. Note 2024
Extra interest for first-time buyers	80EEA	₹1.5 lakh yearly	IT Circular Archive 2023

These figures show the base support that borrowers can rely upon.

How Government And Banks Responded In Past Years

Government action often follows economic need. In Budget 2020, the Finance Ministry extended the Section 80EEA window to support affordable housing. The ministry placed this update in the official budget document for that year to maintain demand after the slowdown.

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Banks played their part by updating their interest certificates and repayment summaries. These bank statements became necessary because the Income Tax Department requires exact interest and principal figures for each financial year. Bank portals in 2023 and 2024 added clearer formats to match the department’s instructions.

The below table shows how both regimes treat these deductions today.

Feature	Old Regime	New Regime	Official Source
Interest deduction for self-occupied home	Allowed up to ₹2 lakh	Not allowed	CBDT FAQ July 2024
Deductions under 80C and others	Allowed	Mostly blocked	IT Dept. FAQ 2024
Filing approach	Supports higher deductions	Suits simple slab choice	CBDT 115BAC Page

This comparison shapes how families decide between lower slabs or higher savings through deductions.

Conclusion

Borrowers with large EMIs lean towards the old regime because it recognises interest and principal deductions. Under-construction buyers face timing rules that limit their claim until the unit is completed. This affects how they plan submissions for the FY 2024-25 return cycle.

As EMIs grow across major cities, home loan tax benefits remain central to household tax planning. The link between regime choice and deduction strength guides how families prepare their filings each year.

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