An Affordable Housing Loan can save your entire tax for CTC < 11 lakh

TownSIP Research ~ 15 min read

Investing in an affordable housing* can save your entire tax without taking any saving schemes that yield 8–9% of the return. Home loans available at 6.85–7.4% of the interest rate is the most affordable source of funding available in the market today. Let’s have a look at the calculations explaining how an individual with 11 lacs CTC has to pay NIL tax.

Taxable Income Calculations:

*ELSS, other saving schemes can be used to save this part. To show home buying benefits. It is removed in this calculation

Please note that there will be no tax liability if your taxable income is Rs. 5 lakh or less under section 87A relief. However, ITR filing is still mandatory if your income exceeds the basic exemption limit of Rs. 2.5 Lakh. Mostly, it is observed that people with NIL tax do not file their taxes. However, We strongly advise them to file their taxes to take benefits of government subsidies. One of them is 2.67 lacs benefit under Pradhan Mantri Awas Yojna (PMAY). In addition, there are multiple subsidies and loan schemes being announced from time to time that may help tax abiding citizens.

Tax Calculations:

Total interest paid for 40 lacs of a loan over 10 years come to ₹15,48,500/- at the existing rate of interest. Total tax paid over 10 years considering a fixed salary, comes to ₹10,67,870/-. The difference between the total tax paid & interest paid comes to ₹4,80,630/- over 10 years which means that you need to spend merely 4005/- per month to own an immovable asset. Let’s take rent earning into consideration too without escalation to understand why buying a home is financial discipline.

For a home with a home loan worth of 40 lacs, you end up saving ₹ 12.26 lacs additionally, and also an immovable asset is built. No wonder why it’s said that BEST investment on EARTH is EARTH.

To buy an affordable home* in Pune, apply for the Mankeshaw Enclave. Only for government employees and their wards. Visit to know more.

*Affordable Housing: Only homes under 45 lacs of agreement value and area less than 60sqmt (645 sqft) in an urban area qualifies for a benefit available under section 80EEA.

#For more advise on tax filing and filing your tax, writer strongly recommend to visit,

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