How To Claim Deduction On Interest On Home Loan?
- Claim for a deduction on interest on home loan under section 24C and 80EEA can be made by individuals by submitting necessary details to his employer in Form 12BB with supporting documents such as Ownership details and a provisional home loan certificate. Once you submit documents related to interest on a home loan to your employer, it will be adjusted on your TDS (Tax Deducted at Source) deductions accordingly.
- If the individual is self-employed or a freelancer, submission of such documents is not required. However, such documents are needed to estimate the Advance Tax liability for each quarter and claim it while filing the Income Tax Return (ITR).
- The employee can also avail under section 80C tax deduction on the principal amount by submitting necessary documents to the employer in Form 12BB. There are other deductions that can also be claimed by providing documents such as Life Insurance Premium, PPF, Mediclaim etc.
- The tax-saving documents that are considered for deduction by the employer will be shown in Form 16.
- If an Individual, while filing ITR, shows Interest on a Home loan as income from House Property, it’s not required to submit those documents to the Income Tax Department.
While one chooses not to submit the documents to the employer, they can claim deduction on the Interest on Home Loan and Principal amount when filing ITR. But such a process takes time, and therefore a person should declare the details of house property to the employer so that it can be adjusted with TDS.
For tax exemption claims on the home loan, one is required to furnish the PAN number of the financial institution or bank from where the loan was acquired. The home loan certificate has now been modified by the loan providers, which quotes their PAN Number. Some of the popular banks that provide home loans along with their PAN numbers are provided. Below mentioned is a complete list of banks, along with their PAN numbers.
- State Bank Of India – AAACS8577K
- ICICI Bank – AAACI1195H
- HDFC – AAACH0997E
Reason Behind Submitting The Tax Saving Documents To The Employer
The basic concept of personal income tax is ‘pay as you earn’. There is also a compulsory deduction of tax at source (TDS) from the salary paid to each employee by the employer. From the Income Tax Act, 1961, section 192 has made it mandatory for the employer to deduct taxes at source (TDS) while making salaries.
From the beginning of the financial year, the employer asks the employees to declare tax-saving documents. Since the beginning of the financial year, i.e., from April 1, the employer starts computing taxes on employees’ salaries based on the declared proposed investment and deducts taxes.
But from the month of January, the employer asks employees to furnish documentary evidence of actual investments made during the year. Once the actual investment documents are submitted, the accounts department starts computing the taxes based on the documents of the actual investments made.
Individuals can invest in different tax-saving investments whose values can be different from the values of investments declared earlier, but the deduction from taxable income will be made based on the actual documents submitted and not on the proposed investment declaration made earlier.
This enables the employees to finalize any tax adjustments within the balance months of the current financial year. The taxes will be adjusted on the last three months of the financial year if there has been a deduction of taxes in excess or less, accordingly. It is not required to send the documents at the time of filing taxes to the office of the Income Tax Department. The employer will receive those documents from employees and deduct taxes accordingly.
Individuals are requested to refrain from waiting till March to save taxes as there can be a considerable burden of taxation in the last month of the financial year and less take-home pay.
Benefits Of Income Tax On Home Loan
Tax Benefits on Home Loan for Financial Year 2019-20 is given:
| Benefits On Tax | On Interest Payment | On Principal Payment |
| Self-Occupied- First home | A maximum of ₹2 lakhs on actual home loan interest if construction is completed within 5 years from the conclusion of the financial year when the loan is taken.
Tax exemption of ₹30,000 is allowed if the construction is not complete within 5 years. An additional deduction of ₹1.50 lakhs is allowed on interest paid on a home loan if there is a purchase of affordable houses up to ₹45 lakhs till the end of the financial year. The benefit is made available till 31st March 2021 |
A maximum of ₹1.5 lakhs is eligible for deduction of tax on the actual principal repaid |
| Vacant/Rented property (deemed to be let-out property) | 1. ₹2 lakhs
2. Amount of interest actually paid by the taxpayer for all the properties. The exemption will be provided on lower of any of the two, 1. Or 2. |
The maximum allowed deduction under section 80C is ₹1.5 lakh only if the owner of the property is residing in a different city for the purpose of work. |
| Additional Property or Second Home | ₹2 lakhs
Amount of interest actually paid by the taxpayer for all the properties. The exemption will be provided on lower of any of the two, 1. Or 2. |
Nil |
| Property under construction | A claim of a maximum of ₹2 lakh can be made after the completion or handing over of the property. They paid interest can be equally claimed in five financial years. | Nil |
Documents Required To Claim Income Tax Benefits On A Home Loan
A list of documents is provided that needs to be submitted to claim the benefits of Income Tax on Home loan in Form 12BB. Some employers have their own websites or employee portal where they can upload the following information.
- Copy of Possession Certificate.
- Copy of Sale Deed if a copy of Possession letter is not available.
- Copy of Lease Deed if the property is let out.
- Provisional Certificate of Interest from Financial Institution/Banks where should be explicitly mentioned the principal amount, the interest break-up, name and address of the lender. PAN number and the date of loan sanction should be mentioned in the Certificate.
- Self-Declaration of the proportion of ownership should be furnished for Joint Home Loan.
- Form 12C
Provisional Home Loan Interest Certificate
It is required to submit the interest certificate from the financial institution or bank, which mentions specifically the principal amount and the interest on a home loan for a financial year. The amount that is paid by the individual at the start of the financial year (April) up to the time when the Certificate will be generated is known as Actual repayment.
The amount that an individual expects to pay from the day the Certificate is generated up to March 31, the end of the financial year, is known as Expected Repayment.
Provisional Certificates of home loans are provided by most banks through net banking. For example, suppose an individual has taken a home loan from Union Bank, he/she can download/view the Interest Certificate (Provisional) of the home loan account(s) by the given below steps. It can also be downloaded/printed in PDF format and can also be viewed online.
- Log in to Internet Banking website with valid credentials
- Go to Enquiries Tab
- Click on the ‘Home Loan Interest. Certificate (Provisional)’ link under ‘Enquiries’ tab. Then select the required account for which you need a Home Loan Interest Certificate.
PAN Number Of The Lender For Home Loan:
PAN number of the respective financial institution/bank from where the loan is taken is to be provided for claiming tax exemptions on the home loan. The payment certificate of interest is modified to show the PAN number. A list of financial institutions or banks along with their PAN numbers is provided. To verify the PAN number, one can visit the Income Tax website.
PAN Number Of Banks And Financial Institutions
| Financial Institutions/Banks | PAN Number |
| Axis Bank Limited | AAACU2414K |
| Allahabad Bank | AACCA8464F |
| Aadhaar Housing Finance | AAICA4667N |
| Andhra Bank | AABCA7375C |
| Bank of Baroda (BoB) | AAACB1534F |
| Bank of India (BoI) | AAACB0472C |
| Bank of Maharashtra (BoM) | AACCB0774B |
| Central Bank of India | AAACC2498P |
| Canara Bank | AAACC6106G |
| Corporation Bank | AAACC7245E |
| Citibank | AAACC0462F |
| DHFL | AAACD1977A |
| Deutsche Bank | AAACD1390F |
| DCB Bank Limited | AAACD1461F |
| Federal Bank | AABCT0020H |
| GIC Housing Finance Limited | AAACG2755R |
| Gruh Finance | AAACG7010K |
| HDFC | AAACH0997E |
| HDFC Bank Limited | AAACH2702H |
| Housing & Urban Development Corporation Ltd. | AAACH0632A |
| HSBC | AAACT2786P |
| ICICI Bank Limited | AAACI1195H |
| Indian Overseas Bank (IOB) | AAACI1223J |
| Indian Bank | AAACI1607G |
| Indusland Bank Limited | AAACI1314G |
| IDBI Bank | AABCI8842G |
| Kotak Mahindra Bank Limited | AAACK4409J |
| Karnataka Bank | AABCT5589K |
| L&T FinCorp Limited | AAACI4598Q |
| LIC Housing Finance Limited | AAACL1799C |
| Oriental Bank of Commerce | AAACO0191M |
| PNB Housing Finance Limited | AAACP3682N |
| Punjab National Bank (PNB) | AAACP0165G |
| Punjab & Sind Bank | AAACP1206G |
| State Bank of India (SBI) | AAACS8577K |
| State Bank of Hyderabad (SBH) | AADCS4009H |
| Syndicate Bank | AACCS4699E |
| Sundaram Finance | AAACS4944A |
| The South Indian Bank Limited | AABCT0022F |
| TATA Motors Finance Limited | AACCT4644A |
| TATA Capital | AADCP9147P |
| TATA Capital Housing Finance | AADCT0491L |
| UCO Bank | AAACU3561B |
| United Bank of India | AAACU5624P |
| Union Bank of India | AAACU0564G |
| YES Bank Limited | AAACY2086D |