The government offers multiple tax benefits under its Income Tax Act (1961) to motivate more citizens to invest in and buy real estate. You can save a lot of money on your taxes if you take advantage of the tax benefits. The usual Home Loan Interest Rate are very high for people with average incomes. With these multiple rebates and subsidies, the home loan interest rates are reduced, and the tax reductions are an additional benefit.
Bajaj Finance follows the rules set out by the government to allow customers to enjoy the tax benefits as per the various sections of the IT Act. They require a specific set of documents from the applicants before approving their home loan and giving them the available tax reductions.
The records as are necessary for a Yes Bank Home Loan are -
Proof of identity: Any 1 of PAN card, Driver's license, Passport, etc.
Residence proof (any 1 of these): Utility bills (electricity bill, telephone bill, water bill), Aadhar Card, Ration Card, etc.
2 Passport size photographs.
Property papers with proof of occupancy, License from the housing society (if any).
Proof of income: Both the salaried and self-employed professionals have to present their income tax returns of the last three months and latest salary slips or Form 16.
After submitting the documents required and satisfying the eligibility criteria, the applicant's request for the home loan can be approved, and the loan amount gets disbursed within a day. After the repayment tenure starts, the borrower can avail of certain tax benefits to reduce the burden on his/her finances.
These tax benefits are -
Tax deduction through Section 80C: Under this section of the IT Act (1961), the borrower can get tax rebates of up to Rs. 1.5 Lakh per year on the tax for the loan amount taken. The home loan amount should be only used to either buy or build a new residence. The construction should be completed within five years after the loan was sanctioned to be qualified for this tax deduction. If the property is sold or its ownership is transferred before this period, the benefits are directly added to the applicant’s income.
Tax deduction through Section 24(b): According to this section of the IT Act, you are qualified for a tax deduction of nearly Rs. 2 Lakh each year on the home loan interest rate. This benefit is also available for those applicants who are either purchasing a new home/property or constructing a new residential estate. This tax deduction can only be claimed after the house construction is complete. After the construction is over (5-10 years into the future) and before the loan matures, the applicant can enjoy the benefits of this tax deduction on the interest rate of Rs. 2 Lakh each year.
Tax deduction under Section 80EEA: Under the "Housing For All" scheme of the government, the applicants are eligible for additional Rs. 1.5 Lakh on the interest rate for their home loan. A condition that comes with this scheme is that the loan amount should not be more than Rs. 45 Lakh.
Tax deduction on Registration fees and Stamp Duty: Additional expenses like stamp duty, registration charges, etc., are linked to the transfer of the real estate. Applicants can avail themselves of up to Rs. 1.5 Lakh tax reductions in the financial year when the lender imposed these charges.
Conclusion
Another way to increase your tax benefits is by applying for a home loan with an eligible family member as a co-applicant. This increases your home loan eligibility, and the interest rate offered is also lowered. The concept of joint home loans is the best way to maximise your benefits on taxes. Both the applicants can individually avail of tax benefits,which help them get more rebates via various income tax sections.
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