Compute home loan EMI and tax benefits.
Monthly EMI
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Year-1 24(b) tax saving
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Year-1 80C tax saving
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Worked example
Consider a self-occupied home loan of Rs 50,00,000 at 8.5 percent annual interest over 20 years, for a borrower in the 30 percent old-regime tax bracket. The monthly rate is 8.5 percent divided by 12, and the tenure is 240 months. The EMI formula gives a monthly payment of about Rs 43,391, so the total repaid over 20 years is roughly Rs 1,04,13,879, of which more than half is interest. In the first year the loan is large, so interest dominates: about Rs 4,21,182 of the year-one EMIs is interest and only about Rs 99,511 is principal. Section 24(b) caps the deductible interest at Rs 2,00,000 for a self-occupied home, so the year-one interest saving is 30 percent of Rs 2,00,000, which is Rs 60,000. Section 80C lets you claim principal repayment up to Rs 1,50,000, but here only Rs 99,511 of principal was paid, so the 80C saving is 30 percent of Rs 99,511, which is about Rs 29,853.
| Step | Value |
|---|---|
| Loan amount | Rs 50,00,000 |
| Rate and tenure | 8.5 percent, 20 years |
| Monthly EMI | Rs 43,391 |
| Total repaid over 240 months | Rs 1,04,13,879 |
| Year-1 interest | Rs 4,21,182 |
| Year-1 principal | Rs 99,511 |
| Year-1 24(b) saving at 30 percent | Rs 60,000 |
| Year-1 80C saving at 30 percent | Rs 29,853 |
How it is calculated
The EMI uses the standard reducing-balance formula, where the payment equals principal times the monthly rate times (1 plus rate) raised to the number of months, divided by the same growth factor minus one. Each month, interest is charged on the outstanding balance and the rest of the EMI reduces the principal, so the interest share shrinks over time while the principal share grows. The calculator builds the first year month by month to split the EMIs into interest and principal. The tax benefit applies only under the old regime: Section 24(b) allows interest of up to Rs 2,00,000 a year on a self-occupied property, and Section 80C allows principal repayment within the overall Rs 1,50,000 limit. Multiplying the deductible amounts by your marginal tax rate gives the rupee tax saved. The new regime forfeits both deductions.