The Income-tax Act, 2025 came into force on 1 April 2026 and repealed the Income-tax Act, 1961. If you have a home loan, the deductions you know as 24(b) and 80C still exist, but with new section numbers. The bigger question is the same as before: whether you claim them at all depends on the tax regime you choose.
This guide maps old sections to new ones, explains what each regime allows, and works through an example for a salaried borrower in Thane.
Old section, new section
| Benefit | Income-tax Act, 1961 | Income-tax Act, 2025 | Limit |
|---|---|---|---|
| Interest on a self-occupied home | 24(b) | 22(1)(b) and 22(2) | ₹2 lakh a year (₹30,000 if conditions not met) |
| Pre-construction interest | 24(b) | 22(1)(c) | Five equal instalments, inside the ₹2 lakh cap for a self-occupied home |
| Interest on a let-out home | 24(b) | 22(1)(b) | No cap on the deduction |
| Principal, stamp duty, registration | 80C | 123 with Schedule XV | ₹1.5 lakh in total with PF, insurance and other items |
| First-home interest (loans sanctioned 2016-17) | 80EE | 130 | ₹50,000 a year |
| Affordable-home interest (loans sanctioned 2019-22) | 80EEA | 131 | ₹1.5 lakh a year |
| House property loss set off against salary | 71(3A) | 109(1)(b) | ₹2 lakh a year |
| Carry forward of the balance loss | 71B | 110 | Eight tax years, against house property income only |
| New tax regime | 115BAC | 202 | Default unless you opt out |
The limits did not change. One point needed fixing: the Act as passed in August 2025 did not include pre-construction interest in the ₹2 lakh cap for a self-occupied home. Clause 30 of the Finance Bill, 2026 amends section 22(2) so that it does, matching the old law, with effect from 1 April 2026. The Bill became the Finance Act, 2026 on 30 March 2026.
Interest: section 22
For a home you live in (the Act calls it a property with nil annual value under section 21(6)), you can deduct interest of up to ₹2 lakh a year, but only if:
- the loan was taken to buy or build the house, and
- the purchase or construction is completed within five years from the end of the tax year in which you borrowed, and
- you have an interest certificate from the lender.
If any of these fails, or the loan is for repairs or renovation, the cap is ₹30,000. The ₹2 lakh is a combined cap for up to two self-occupied homes, not ₹2 lakh each.
For a let-out home there is no cap on interest. If interest and the 30% standard deduction exceed the rent, you have a house property loss. Under the old regime you can set off up to ₹2 lakh of it against salary (section 109) and carry the rest forward for eight tax years against house property income only (section 110).
If you move your loan to another lender, the new lender's certificate must also show interest on the new loan (section 22(4)). Our balance transfer and top-up guide covers what a top-up does to your claim.
Principal, stamp duty and registration: section 123
Section 123 allows up to ₹1.5 lakh a year for the items in Schedule XV. Paragraph 3 of the Schedule covers repayment of a home loan from a bank, co-operative bank, LIC, NHB, a housing finance company or certain employers, plus stamp duty, registration fees and other transfer expenses.
Points to note:
- It is one ₹1.5 lakh pool shared with PF, life insurance, ELSS, tuition fees and so on. Many salaried people fill it with PF alone.
- Stamp duty and registration count only in the year you pay them. On a Thane flat these alone can be more than ₹1.5 lakh; see the full cost of buying a home in Thane and Badlapur.
- Interest (which is claimed under section 22) and repairs or renovation after completion do not count here.
- If you sell the house within five years from the end of the tax year in which you got possession, all section 123 deductions claimed for it are added back to your income in the year of sale.
The new regime: what is allowed and what isn't
The new regime under section 202 is the default. A salaried person can opt for the old regime each year when filing the return (section 202(4)). People with business income opt out by the return due date, and that choice sticks: they can switch back to the new regime only once.
| New regime (default) | Old regime (opt in) | |
|---|---|---|
| Interest on a self-occupied home | Not allowed | Up to ₹2 lakh |
| Principal, stamp duty (section 123) | Not allowed | Up to ₹1.5 lakh |
| Sections 130 and 131 | Not allowed | Allowed if eligible |
| Interest on a let-out home | Allowed against its rent | Allowed |
| House property loss against salary | Not allowed, and the loss lapses | Up to ₹2 lakh, rest carried forward |
| Standard deduction on salary | ₹75,000 | ₹50,000 |
| Rebate | Nil tax up to ₹12 lakh income | Nil tax up to ₹5 lakh income |
So under the new regime, a let-out flat's interest can wipe out its rent, but any loss beyond that cannot be used now or later (section 202(3)).
Sections 130 and 131 (old 80EE and 80EEA)
These are only for loans sanctioned in fixed windows: 1 April 2016 to 31 March 2017 for section 130 (loan up to ₹35 lakh, house value up to ₹50 lakh), and 1 April 2019 to 31 March 2022 for section 131 (stamp duty value up to ₹45 lakh). You must not have owned another home on the sanction date. A new loan taken in 2026 does not qualify. If you already claim them, they continue under the old regime, over and above section 22.
Joint home loans
Where a flat is co-owned in definite shares, section 24 of the new Act taxes each co-owner separately, and each gets the self-occupied relief as if they owned the house alone. In practice:
- Each person must be both a co-owner and a co-borrower, and should pay their share of the EMI from their own account.
- Each can claim interest up to ₹2 lakh and principal within their own ₹1.5 lakh section 123 limit, in proportion to what they pay.
- Each chooses their own regime. One spouse may claim under the old regime while the other stays in the new.
Under-construction flats
No interest deduction is allowed while the flat is being built. From the tax year in which construction is completed, add up the interest (pre-EMI) paid before that year and claim it in five equal instalments, along with that year's interest, all within the ₹2 lakh cap for a self-occupied home. If completion takes longer than five years from the end of the year you borrowed, the cap drops to ₹30,000. Principal paid before possession is generally not deductible under section 123.
Use our pre-EMI calculator to estimate pre-construction interest, and read what to check before borrowing for an under-construction flat.
FY 2025-26 vs tax year 2026-27
- FY 2025-26 (income up to 31 March 2026) is still taxed under the 1961 Act. Your return due in 2026 uses 24(b), 80C and 115BAC.
- Tax year 2026-27 (1 April 2026 to 31 March 2027) is the first under the 2025 Act, with the new section numbers. The term "assessment year" is gone.
- House property loss carried forward from earlier years continues under section 536(2)(m) of the new Act. A section 80C claim reversed by a sale after 1 April 2026 is taxed in the year of sale.
Worked example: salaried borrower in Thane
Assumptions: gross salary ₹18 lakh, a ₹50 lakh loan at 8.5% for 20 years (EMI about ₹43,391) on a flat the borrower lives in, and employee PF of ₹60,000 a year. In the first year, interest is about ₹4,21,000 and principal about ₹99,500. This is for illustration only, and it ignores professional tax, health insurance and other deductions.
| Old regime | New regime | |
|---|---|---|
| Gross salary | ₹18,00,000 | ₹18,00,000 |
| Standard deduction | ₹50,000 | ₹75,000 |
| Interest, section 22 (capped) | ₹2,00,000 | Nil |
| Section 123 (PF + principal, capped) | ₹1,50,000 | Nil |
| Taxable income | ₹14,00,000 | ₹17,25,000 |
| Tax before cess | ₹2,32,500 | ₹1,45,000 |
| Tax with 4% cess | ₹2,41,800 | ₹1,50,800 |
The new regime is about ₹91,000 cheaper, even though the borrower pays ₹4,21,000 of interest. The lower slab rates outweigh the home loan deductions. The old regime usually wins only when total deductions are much larger than this.
If the same flat were let out at ₹15,000 a month (₹1,80,000 a year): after the 30% deduction of ₹54,000 and interest of ₹4,21,000, the loss is ₹2,95,000. Under the old regime, ₹2,00,000 is set off against salary and ₹95,000 is carried forward. Under the new regime, the rent becomes tax-free in effect, but the ₹2,95,000 loss is lost. Run your own numbers both ways, or ask your CA, before you file.
How Biz Corp Solutions helps
We help salaried and self-employed borrowers in Thane, Badlapur and across Maharashtra compare banks and HFCs for home loans, balance transfers and loans against property, and we make sure you get the interest and principal certificates you need at tax time. The lender makes the final credit decision, and your CA should confirm your tax position. See our home loan and loan against property services.
This article is based on the Income-tax Act, 2025 as published in the Gazette, the Finance Bill, 2026 and tax commentary available up to 21 October 2026. It is general information, not tax advice; confirm your own position with a chartered accountant.