Section 24(b) of the Income Tax Act allows homeowners who've taken a home loan to claim a deduction on the interest portion of their EMI, up to a maximum of ₹2 lakh per financial year, for a self-occupied property. This is separate from, and in addition to, the Section 80C deduction available on the principal repayment portion of the same home loan.
This deduction is only available if you opt for the Old Tax Regime, and the property must generally be self-occupied to claim the full ₹2 lakh limit — if the property is rented out, the interest deduction rules work slightly differently and can, in certain cases, be claimed without the same upper cap. Because home loan interest is often substantial in the early years of a loan, this deduction can meaningfully reduce a homeowner's taxable income.