The home loan EMI has two components: interest and principal. The Income TaxDepartment treats these two separately while offering tax benefits to borrowers. The tax relief on principal is allowed under Section 80C, whereas the benefit for interest is allowed under Section 24. The borrowers have to rely on the loan amortisation table sent by the bank to determine the principal or interest repaid. This is because the EMI does not constitute the two components in the same proportion. The banks charge a relatively higher interest in the initial EMIs and it diminishes over time. Similarly, the initial principal is relatively low compared with the later ones. The amortisation table lists the principal and interest of each EMI paid.
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