Tax-benefits for NRIs applying for Home Loans in India

NRI (Non-Resident Indians) & Indian Resident get similar tax benefits subject to repayment of principal and interest component of home loans availed in India. Before starting the further discussion on benefits available to NRIs in terms of home loans, it is important to evaluate whether the tax deduction available in India would be beneficial to NRIs or not. NRIs can be benefitted from the tax deductions if they have any income which is taxable in India. If NRIs have any taxable income in India, it will be easy for them to claim deductions on the repayment of interest and principal component from the taxable income as per Section 24, 80 EE, and 80C of the Income Tax Act.

Tax Benefits Available to NRIs for Home Loans in India

Following are the few tax benefits related to NRI home loans availed in India:

  • According to Section 80C, the deduction is available with regard to the repayment of the principal component of home loans, which can be a maximum of INR 1,50,000 p.a.
  • As per Section 24:
  • On home loans the deduction is available for the repayment of interest up to INR 2,00,000 p.a. which is available under the head ‘Income from house property.
  • Deduction related to repayment of interest on NRI home loans, even though the property is in the pre-construction phase.
  • As stated in section 80C, NRIs have the right to avail deductions for stamp duty and registration charges paid for acquiring their property.
  • Availing home loans for NRIs in order to buy their first home, an additional deduction of up to INR 50,000 p.a. is available (subject to the fulfilment of certain conditions) with regard to the repayment of interest on home loans as per Section 80EE.

Changing status from NRI to resident Indian

In a scenario if the NRIs permanently shifts back to India then their status will be changed from Non-Resident Indian to Resident Indian, the lender may reassess your loan eligibility and repayment capacity and work out a revised repayment schedule. Anyhow there is no major impact as a resident has the freedom to acquire any type of property in India.

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