Is home loan mandatory to save tax ?

Generally speaking, it is mandatory to take a home loan, to make payment of interest and thereby save your income-tax. But in a situation where you have got money available with you by selling your flat, then it makes no sense not to continue make repayment of the housing loan. Moreover, if you do not pay the housing loan and use the proceeds of rent in taking out Bank Fixed Deposit, in that situation your income will be from Bank Fixed Deposit which again would become taxable. This means that Fixed Deposit interest becomes taxable and deduction you get for housing loan which does not make a sense. However, if you plan to use the proceeds of plot to buy yet another plot of land which will mean more income and appreciation in future, then surely it is good point to go in for continuance of housing loan.