Your home loan's tax breaks.
Under the old regime: deduct up to ₹2,00,000 interest (Sec 24b) + ₹1,50,000 principal (Sec 80C) = up to ₹1,05,000 tax saved at the 30% slab. Under the new regime (default), these are gone, the reason many home-loan borrowers deliberately stay on the old regime.
Two sections, one big asterisk
A home loan comes with two well-known income-tax deductions in India, but both live entirely inside the old tax regime, and the new regime (now the default) strips them away. That single fact changes the maths for millions of borrowers, so start there before counting any savings. If you're on the old regime, here's what the two deductions are worth at each slab:
| Tax slab | 24(b) interest saved | 80C principal saved | Total / year |
|---|---|---|---|
| 5% | ₹10,000 | ₹7,500 | ₹17,500 |
| 20% | ₹40,000 | ₹30,000 | ₹70,000 |
| 30% | ₹60,000 | ₹45,000 | ₹1,05,000 |
Old-regime deductions, FY 2025-26. Assumes annual interest ≥ ₹2L and principal ≥ ₹1.5L, and that 80C isn't already filled by EPF/ELSS/insurance. Not tax advice. Confirm with a CA.
The decision the tax break really drives
The home-loan deductions aren't just a rebate. For many borrowers they're the deciding factor in the old-vs-new regime choice itself. If your loan generates the full ₹2 lakh interest deduction and your 80C isn't already maxed, the old regime's deductions can outweigh the new regime's lower rates. But run the actual numbers both ways: for someone whose 80C is already full with EPF and whose interest is well under ₹2 lakh, the new regime's simpler, lower-rate structure usually wins outright. Don't assume the loan "saves tax": it only does under the old regime, and only if you have the deduction headroom to use.