EMI moratorium facility can affect tax deductions on your home loan

 

Most of you would already know that the EMI moratorium facility offered by the Reserve Bank of India on all term loans, including credit cards, has a cost attached. You have to pay extra as the interest continues to accrue on the outstanding loan amount during the moratorium period. However, what you may not be aware of is the fact that if you opt for a moratorium on home loan EMIs, it could affect the tax deduction benefit you avail of.
The tax deduction benefit you get on the home loan principal repayment will reduce if you take the moratorium that is now available for six months (March to August). If you miss paying your EMIs, your principal repayment for the year will be lower, in turn reducing the tax deduction benefit. However, the deduction benefit you get on interest repayment will stay intact even if you don’t pay the interest amount this year itself. In fact, if you were not exhausting the entire deduction limit of ₹2 lakh on interest repaid, the increased interest payment may help you reach that limit and claim higher tax deduction.

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