Buyer's Guide

 Documents Needed For Loan Section Content

• What are the documents required for availing a home loan?
  • Completed Application Form
  • Photograph
  • Photo Identity Proof
  • Residence Address Proof
  • Signature Verification Proof
  • Age Proof
  • Fee Cheque
• For Salaried applicants
  • Last 3 months’ Salary Slip
  • Form 16
  • Repayment Track record of existing loans/Loan closure letter
  • Bank Statement for the last 6 months from Salary Account
• For Self Employed Applicants
  • A brief introduction of Business/Profession
  • Photo Identity Proof, Residence Address Proof, Signature Verification Statement for all the main partners/directors
  • Repayment Track record of existing loans/Loan closure letter
  • Board Resolution in case of a company
  • Proof of existence of the company
  • Office Address Proof
  • Income Tax Return / Computation of Total Income / Auditors Report / Balance Sheet / Profit & Loss Account certified by Chartered Accountant for last 2 years (both for business and personal of partners/directors)

• WILL THE LOAN PROVIDE ME WITH A TAX BENEFIT?

Yes.

• DO I GET AN INTEREST DEDUCTION?

If the purchase or construction is completed within three years of the end of the year in which the loan is taken, the interest portion of the EMI is allowed as a deduction under section 24 under the head “income from house property” up to Rs. 2,00,000/- for self-occupied property and full amount of interest in case of let-out property provided that the loss from such let-out house property does not exceed Rs.2 lakhs.

• DO I GET A PRINCIPAL REPAYMENT DEDUCTION?

The repayment of the loan’s principal amount can be claimed as a deduction under section 80C up to a limit of Rs. 1.5 lakhs. You can also deduct payments for stamp duty, registration fees, and other expenses for the purpose of transferring property into the name of the assessed under Section 80C. All of these deductions, however, must not exceed Rs. 1.5 lakhs in total.

However, no deduction under Section 80C is available for payments made toward the cost of any additions, alterations, renovations, or repairs made after the completion certificate has been issued.

• PROPERTY INCOME FROM A HOUSE?

If a person (resident or NRI) owns more than one house property, only one of them is considered self-occupied, according to the Indian Income Tax Act. A self-occupied property will not be subject to income tax. The other, whether rented or not, will be deemed to be given on rent, and deemed rental income will be added to income (based on certain valuations prescribed by the income tax rules). In addition, TDS will be deducted from NRI’s actual rental income.

• IS THERE A WEALTH TAX?

The value of specified assets exceeding Rs. 30,00,000 is subject to wealth tax. House property is among the specified assets. The Wealth Tax Act does, however, provide an exemption for one house property. Returning Indians are entitled to a special exemption in respect of investments made in residential property with money brought from outside India or balances held in NRE accounts as of the date of return to India.

• GAIN IN CAPITAL?

A residential property is considered a long-term investment or a short-term investment if the seller holds it for more than 36 months. The indexed cost of acquisition will be used to calculate long-term capital gain. According to the Income Tax Act, NRIs can claim a capital gain tax exemption if they reinvest in specified assets.

• TAX EXEMPTION CERTIFICATE OR CERTIFICATE FOR LOWER RATE DEDUCTION?

In certain circumstances, Section 197 of the Income Tax Act of 1961 allows for tax deductions at lower rates. The maximum rate of tax at which relevant income is taxable in India is the rate prescribed for TDS from NRI income. However, in the vast majority of NRI cases, the actual tax liability is lower.

However, the higher tax deduction is rarely claimed as a refund when filing a Return of Income. The Income Tax Act has a procedure under section 197 that allows an NRI to apply to the Assessing Officer (in prescribed form) for a specific certificate authorising the payer of income (who normally deducts tax at the highest prescribed rate) to deduct tax at a lower or nil rate. After estimating his income, tax liability, and likely TDS, the NRI should apply for a partial or full Tax Exemption Certificate. The payer must deduct tax in accordance with the Assessing Officer’s certificate.