Sukra - Personal Finance

Principal and Interest payments on home loans are eligible for tax benefits under the Income Tax Act, 1961.

Resident Indians -
Interest repayment of Rs. 1,50,000 per year can be deducted under Section 24(b). This will reduce your tax liability by about Rs. 50,490 per year.

Principal amount upto Rs. 1,00,000 per annum can be availed under Section 80©. This will get you a tax saving upto Rs. 33,660 p.a.

For more information - http://in.taxes.yahoo.com/homeloan.html