Chapter 28: Housing Finance and Tax Planning (JAIIB – Paper 4)
1. Under Section 80C of the Income Tax Act, what is the maximum deduction allowed on repayment of principal for a home loan?
A. ₹1 lakh
B. ₹1.5 lakh
C. ₹2 lakh
D. ₹50,000
Section 80C allows a maximum deduction of ₹1.5 lakh per year on repayment of the principal amount of a home loan.
2. Interest paid on a home loan is eligible for deduction under Section 24(b) up to:
A. ₹1 lakh for first home
B. ₹2 lakh for self-occupied property
C. ₹2 lakh for self-occupied property
D. ₹3 lakh for rented property
Section 24(b) allows a deduction of up to ₹2 lakh on interest paid for a self-occupied house property. Higher limits may apply for let-out properties.
3. Tax benefit on interest under Section 24(b) is available only if the loan is taken for:
A. Purchasing a plot only
B. Renovating a rented property
C. Repaying existing personal loans
D. Constructing or purchasing a residential house
Section 24(b) provides deduction on interest paid only for acquiring or constructing a residential property.
4. First-time home buyers can claim additional deduction under Section 80EE for interest up to:
A. ₹50,000
B. ₹1 lakh
C. ₹1.5 lakh
D. ₹2 lakh
Section 80EE provides an additional deduction of ₹50,000 on interest for first-time home buyers subject to certain conditions.
5. To claim deduction under Section 80C for home loan principal repayment, the property must be:
A. Rented to earn income
B. Constructed after retirement
C. Owned by the taxpayer
D. Only purchased from a government scheme
The deduction under Section 80C is allowed only if the taxpayer owns the house property and is making repayments on a home loan taken for it.
6. Mr. Sharma takes a home loan of ₹40 lakh at 8% p.a. interest for a self-occupied house. What is the maximum interest deduction he can claim under Section 24(b)?
A. ₹1.5 lakh
B. ₹2 lakh
C. ₹2.5 lakh
D. ₹3 lakh
Interest paid on a self-occupied house is deductible up to ₹2 lakh under Section 24(b), irrespective of the actual interest amount.
7. A taxpayer repays ₹1.2 lakh principal and ₹1.8 lakh interest on a home loan in one financial year. What is the total deduction available under Sections 80C and 24(b)?
A. ₹2 lakh
B. ₹2.5 lakh
C. ₹3.5 lakh
D. ₹4 lakh
Principal repayment: ₹1.2 lakh (eligible under 80C, limit ₹1.5 lakh). Interest: ₹1.8 lakh (eligible under 24(b), limit ₹2 lakh). Total deduction = ₹1.2 lakh + ₹1.8 lakh = ₹3 lakh.
8. Section 80EE is available for first-time home buyers. Which of the following is a condition?
A. Property value exceeding ₹1 crore
B. Loan sanctioned after 5 years of previous property
C. Home loan taken for commercial property
D. Loan sanctioned for residential property and not owning another house
Section 80EE allows deduction on interest up to ₹50,000 for first-time buyers who do not own any other residential property.
9. Mr. Verma takes a loan of ₹60 lakh to construct a house. He repays ₹1.6 lakh principal and ₹2.2 lakh interest. How much can he claim as deduction in FY 2024-25?
A. ₹3.5 lakh
B. ₹3 lakh
C. ₹4 lakh
D. ₹3.8 lakh
Deduction under 80C = ₹1.5 lakh (max limit), deduction under 24(b) = ₹2 lakh (max limit). Total = 1.5 + 2 = ₹3.5 lakh.
10. For claiming tax benefit on home loan interest under Section 24(b), the construction of house must be completed within how many years from the end of the financial year in which loan was taken?
A. 2 years
B. 3 years
C. 5 years
D. 10 years
Section 24(b) allows interest deduction for self-occupied property once construction is completed within 5 years from the end of the financial year in which loan was sanctioned.
11. Which of the following payments are eligible under Section 80C for deduction in housing finance?
A. Stamp duty and registration charges
B. Principal repayment of home loan
C. Interest on home loan
D. Maintenance charges
Only principal repayment qualifies for deduction under Section 80C. Interest is claimed separately under Section 24(b).
12. The deduction under Section 24(b) is allowed from which income of the taxpayer?
A. Business income only
B. Salary income only
C. Capital gains only
D. Income from house property
Interest paid on home loan is deducted from income under the head 'Income from House Property'.
13. Mr. Singh takes a home loan of ₹35 lakh. Which section allows an additional deduction for first-time buyers?
A. Section 80C
B. Section 24(b)
C. Section 80EE
D. Section 10(14)
Section 80EE provides additional interest deduction up to ₹50,000 for first-time home buyers.
14. Which of the following statements is TRUE regarding tax benefits on housing loans?
A. Interest on home loan is allowed under 80C
B. Principal repayment is allowed under 80C
C. Stamp duty is eligible under 24(b)
D. No deduction is allowed for rented property
Principal repayment qualifies under 80C, while interest qualifies under 24(b). Stamp duty is not deductible.
15. For claiming deductions, the home loan must be taken from:
A. Only from government banks
B. Only from NBFCs
C. Only from HFCs
D. Any approved financial institution or bank
Tax benefits are allowed for loans taken from banks, HFCs, or other financial institutions approved by RBI/Income Tax authorities.
16. Mr. & Mrs. Mehta take a joint home loan of ₹50 lakh. Principal repayment is ₹1.5 lakh and interest paid is ₹2 lakh. How much deduction can each claim under Section 80C and 24(b) if they split the loan equally?
A. ₹1.75 lakh each
B. ₹3 lakh each
C. ₹1.75 lakh each (Principal ₹0.75L + Interest ₹1L)
D. ₹2 lakh each
Joint borrowers can claim deductions proportionate to their share. Half of principal (₹0.75L) under 80C and half of interest (₹1L) under 24(b) = ₹1.75L each.
17. Mr. Kumar took a home loan of ₹30 lakh in FY 2022-23. Construction completed in 2024-25. When can he start claiming interest deduction under Section 24(b)?
A. From FY 2022-23
B. From FY 2024-25 when construction is completed
C. From FY 2023-24
D. Only after registering the property
Interest on home loan for self-occupied property is deductible only after construction is completed.
18. Pre-EMI interest paid during construction period is:
A. Not allowed for any deduction
B. Fully deductible in the year paid
C. Allowed under Section 80C
D. Allowed in 5 equal installments under Section 24(b) after construction
Pre-EMI interest during construction can be claimed in 5 equal installments starting from the year the property is completed, under Section 24(b).
19. Mr. Reddy owns two houses. One is self-occupied, and the other is rented out. He pays ₹1.5 lakh interest on self-occupied and ₹3 lakh on rented property. What is the total deduction under Section 24(b)?
A. ₹1.5 lakh
B. ₹3 lakh
C. ₹4.5 lakh
D. ₹5 lakh
Deduction for self-occupied = ₹2L max, actual ₹1.5L. Rented = ₹3L actual, allowed fully. Total = ₹1.5L + ₹3L = ₹4.5L.
20. Mr. Jain paid ₹2 lakh principal and ₹1.8 lakh interest for a home loan. He also qualifies for Section 80EE deduction of ₹50,000. What is the total deduction he can claim?
A. ₹4.3 lakh
B. ₹3.8 lakh
C. ₹4 lakh
D. ₹3 lakh
Principal under 80C = ₹1.5L (limit), Interest under 24(b) = ₹1.8L, 80EE = ₹50,000. Total = 1.5 + 1.8 + 0.5 = ₹4.3L.
21. A home loan taken for renovation qualifies for which of the following deductions?
A. Only Section 24(b)
B. Section 80C for principal and Section 24(b) for interest
C. Only Section 80EE
D. No deduction allowed
Loans taken for renovation are eligible for deduction on principal repayment under 80C and interest under 24(b).
22. Mr. Sharma took a home loan in 2022 for an under-construction property. The property was completed in 2024, but possession was taken in 2025. When does Section 24(b) deduction start?
A. 2022-23
B. 2023-24
C. 2024-25
D. 2024-25 after construction is completed
Deduction under 24(b) starts after construction is completed, irrespective of possession date.
23. Tax benefits under Sections 80C and 24(b) can be claimed on a home loan taken for:
A. Agricultural land
B. Commercial property
C. Residential house
D. Shop-cum-office property
Deductions under 80C and 24(b) are available only for loans taken for a residential house.
24. Mr. Roy owns two houses: one self-occupied and one rented. Can he claim Section 80EE deduction for first-time home buyers on the rented property?
A. Yes, fully
B. No, only for residential property which is self-occupied
C. Yes, but limited to ₹25,000
D. Yes, if rented within 5 years
Section 80EE is allowed only for first-time home buyers who do not own any other residential house.
25. Deduction for principal repayment is available under Section 80C. Can this deduction be claimed for a second home purchased with a home loan?
A. Yes, fully
B. Yes, only if rented out
C. No, only for first or self-occupied home
D. Yes, but limited to ₹50,000
Section 80C deduction for principal repayment is generally allowed for the first home or self-occupied property, not for second home unless specific conditions are met.
