Home loan interest field greyed out in ITR? What it means for taxpayers | Personal Finance

Some taxpayers filing their income tax returns (ITR) for the assessment year (AY) 2026-27 may notice that the field for claiming home loan interest on a self-occupied house is disabled in the ITR utility. While this may appear to be a technical issue, tax experts say it is, in most cases, working exactly as intended.

 

The disabled field is linked to the tax regime selected while filing the return. Under the new tax regime, which is the default regime for individual taxpayers, deductions for home loan interest on a self-occupied house are not available. As a result, the ITR utility automatically disables the relevant field.

 
 

Experts say taxpayers should verify a few details before assuming there is a problem with the filing utility.

 

Check these details before filing

According to Parag Jain, tax head at 1 Finance, taxpayers should first confirm which tax regime has been selected in the return.

 

“The deduction for home loan interest on a self-occupied property under Section 24(b) is available only under the old tax regime. If the new regime has been selected, the disabled field is by design and not a technical glitch,” he said.

 

Jain also advised taxpayers to check whether the property has been correctly classified as self-occupied or let out in the house property schedule. A wrong selection can affect the availability of deductions. He further recommended downloading the latest version of the ITR utility, as the Income Tax Department periodically releases updates during the filing season.

 

Pranav Sai S, tax expert at ClearTax, echoed the view, saying taxpayers should also ensure that the return has not automatically picked the new tax regime based on earlier inputs. “If the home loan interest field for a self-occupied property is disabled, first verify the selected tax regime, then check whether the property has been marked as self-occupied or let out,” he said.

 

Similarly, Mihir Tanna, associate director of direct tax at SK Patodia & Associates LLP, said the field is disabled because interest on a self-occupied property is not deductible under the new regime. He added that an incorrect property classification could also prevent the field from becoming active.

 

How the tax treatment changes

 

The tax benefit on a home loan depends not only on the tax regime but also on whether the property is self-occupied or rented out.

 

Jain explained this through the example of a salaried employee paying Rs 2 lakh annually as home loan interest.

 

Under the old tax regime, a borrower with a self-occupied house can claim a deduction of up to Rs 2 lakh on home loan interest under Section 24(b). In addition, the principal repayment may qualify for deduction of up to Rs 1.5 lakh under Section 80C, subject to the overall limit.

 

According to Jain, this could reduce taxable income by as much as Rs 3.5 lakh. For someone in the 30 per cent tax bracket, that translates into an annual tax saving of around Rs 1.05 lakh.

 

However, under the new tax regime, neither of these deductions is available for a self-occupied house.

 

For a let-out property, the position is different. Home loan interest remains deductible against rental income under both tax regimes. However, Jain pointed out that while the old regime allows house property losses of up to Rs 2 lakh to be set off against salary income, the new regime does not permit such a set-off. Instead, losses can only be carried forward against future income from house property.

 

Sai S illustrated the difference with the example of a salaried employee earning Rs 15 lakh annually and paying Rs 2 lakh in home loan interest. Under the old regime, the taxable income reduces because of the Section 24(b) deduction. Under the new regime, the deduction is unavailable, resulting in a higher taxable income despite a larger standard deduction.

 

Selected the wrong tax regime? It may still be fixable

 

Experts say taxpayers who have accidentally chosen the wrong tax regime may still have an opportunity to correct the mistake.

 

“If the return has not yet been submitted, the regime selection can be changed before filing,” Jain said.

 

If the return has already been filed, salaried taxpayers without business income can generally file a revised return under Section 139(5), provided they meet the prescribed conditions and timelines.

 

However, Jain cautioned that taxpayers intending to opt for the old regime must exercise that option within the original due date for filing the return. Filing a belated return after the deadline could leave them locked into the new regime for that assessment year.

 

Business taxpayers have a separate compliance requirement. According to Jain, they must submit Form 10-IEA before the due date to opt out of the new regime, and changing the regime selection in the ITR alone will not be enough.

 

Tanna added that while accidental regime selection can generally be rectified through a revised return, business taxpayers are subject to stricter one-time switching rules.

 

Common mistakes that can invite scrutiny

 

Experts say home loan deductions are among the areas where taxpayers frequently make avoidable errors.

 

Some of the common mistakes include:

 

• 
  Claiming a Section 24(b) deduction for a self-occupied house while filing under the new tax regime.
• 
  Incorrectly classifying a property as self-occupied or let out.
• 
  Claiming interest that does not match the home loan interest certificate or official records.
• 
  Incorrectly claiming pre-construction interest instead of spreading it equally over five years after possession.
• 
  Leaving mandatory home loan details incomplete in the ITR.
• 
  In joint home loans, claiming the entire deduction without considering the ownership ratio.

 

Tanna noted that in co-owned properties, deductions should generally be claimed in proportion to ownership. He added that taxpayers should also compare the tax savings under both regimes before filing, as lower tax rates under the new regime may, in some cases, outweigh the deductions available under the old regime.

 

Sai S advised taxpayers to verify their chosen tax regime, confirm the property’s occupancy status and reconcile the home loan interest certificate with the figures reported in the return before submission.

 

Experts say spending a few extra minutes reviewing these details can help taxpayers avoid errors, delays in processing or unnecessary tax notices later.