Income Tax exemption

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This discussion clarifies whether a top-up home loan is eligible for Income Tax exemption. Generally, a top-up loan is not deductible if it's not used for acquiring, constructing, repairing, or renovating a residential property. While interest on a standard home loan can be deducted up to Rs 2 lakh, top-up loans for repairs are capped at Rs 30,000, provided you have the necessary documentation.

Shibabrata Bardhan

Shibabrata Bardhan (Querist)
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03 August 2020 Whether Topup in HBL exempted from Income Tax ? Should any one get Income Tax deduction on repayment of Principal alongwith interest u/s 24(b) in House property.

CA Raj Doshi

CA Raj Doshi (Expert)
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04 August 2020 Since the top up loan would not be utilized for purchase or construction of property, no deduction of interest or principal is available.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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19 December 2021 You can claim tax benefit on the top-up loan, provided you have receipts and documents to prove that the top-up home loan taken has been used for acquisition/ construction/ repair/ renovation of a residential property.
Unlike a normal home loan where maximum deduction available on interest payments is Rs 2 lakh, if the top-up loan has been taken for repairs and alterations, then the maximum deduction available in such regards is of Rs 30,000.

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