Finance

1. For the Employed:

• Submission of the Verification of Employment Form.
• Provide the latest salary slip/certificate reflecting all deductions.
• For individuals with transferable jobs, furnish a permanent address to which correspondence regarding the application can be mailed.
• Include a letter from the employer agreeing to deduct the monthly installment for loan repayment from your salary.

2. For the Self-Employed:

• Present balance sheets and profit & loss accounts of the business or profession, accompanied by copies of individual income tax returns for the past three years, certified by a chartered accountant.
• Include a note detailing information on the nature of the business or profession, the form of organization, clients, suppliers, etc.

3. Documents Required for Home Loans for NRIs:

• Provide a copy of the visa stamped on the passport.
• Include the work permit.
• Furnish the overseas bank account statement for the last four months.
• Attach a recent photograph.
• Pay the processing fee.
• For mariners, provide continuous discharge certificates.
• Include a local Power of Attorney (POA) for outsiders.
• Submit post-dated cheques during the disbursement.
• Attach an ID card issued by the employer.

Note: The above conditions are indicative, and the final conditions will be stipulated by financial institutions upon loan approval.

Taxation

1. Is income generated from house property subjected to taxation?

Under the Income Tax Act of 1961, income generated from house property is subject to taxation, as it is considered a part of total income.

2. How is the income of a house property calculated?

The income of a house property depends on the annual value, which is based on the property’s ability to generate revenue. The market value of a property is based on factors such as the rent paid by tenants, the property value set by the municipality, or the rent of similar properties in the locality. The annual value is then calculated, taking into account the higher value of these amounts.

3. Is the annual value still taxable if the house property is self-occupied?

Under Section 23(2)(a), if the property is self-occupied for residence or has been unoccupied since last year, the annual value of the property is nil, and no income tax is levied. The reason for this is that the owner did not earn anything from the property. Moreover, you can also claim a deduction on interest on the loan paid for the property from your total income.

Also, if you own more than two properties for self-use, then only one will be considered as self-occupied, which will earn zero annual value. The other properties will be considered as let out and are subject to tax.

4. What is the deduction amount for self-occupied properties?

For self-occupied property, the amount of tax deduction is up to Rs 2 lakh per year on interest payable on a loan for the purchase, construction, and reconstruction of the property from your total income. Moreover, it is to be noted that interest paid before the completion of the construction is also included in the deduction. This deduction is allowed in 5 equal installments, starting from the year the house is purchased or construction has been done.

5. What is the deduction amount for rented or let-out property?

The allowable deduction for rented and let-out property includes municipal tax paid, 30% of the net annual value, which is after deducting the municipal tax (for repairs and collectional charges), and interest paid on the loan borrowed for the construction/acquisition of the property.

6. How is capital gain calculated when the house property is for sale?

Under Section 54F, an individual can purchase a residential house without having the burden of paying any tax on long-term assets like shares, bonds, and debentures if the net amount received from selling the asset is invested in purchasing or constructing the property. Now, to claim this benefit, an individual is supposed to purchase the house either one year before or two years after the sale of the property. In the case of construction, it must be done three years after the transfer.

Moreover, an individual is not allowed to buy any other residential property or other projects within one year of the sale or construct any other property, except the new house, within two years of the sale.

Another important thing to note is that if the new house is not purchased within the due date of filing the income tax return, the sale consideration is supposed to be deposited in the capital gain account in the authorized bank within the due date.

Under Section 54, the capital gain tax is exempted if the individual reinvests the amount obtained from the sale of the house property, provided the new house is bought within one year or two years after the transaction.

7. What are the alternate deductions one can avail of?

For investments under Section 80C, an individual can avail the following deductions and exemptions (maximum exemption limited to Rs 1.5 Lac, including the employee PF contribution).

LIP: Life Insurance Premium

• Provide a copy of the current fiscal year premium receipt in the name of Self/Spouse/Children.
• Late fees will not be considered.

ULIP: Unit Linked Insurance Plan

• Submit a copy of the current fiscal year premium receipt in the name of Self/Spouse/Children.

ELSS: Equity Linked Saving Scheme/Mutual Funds

• Furnish a copy of the unit statement issued by the mutual fund for investments made in the current fiscal year in the name of Self, indicating the amount invested.

PPF: Public Provident Fund

• Include copies of the current fiscal year contribution receipt and passbook entry in the name of self/spouse/children.
• The maximum exemption permitted is Rs. 150,000.

NSC: National Savings Certificate

• Provide a copy of the certificate for investments made in the current fiscal year in the name of the Self.

Any notified bonds:

• Include a copy of the eligible certificate for investments made in the current fiscal year in the name of the Self.

FD: Fixed deposit for five years

• Submit a copy of the fixed deposit certificate for the amount deposited in the current fiscal year in the name of the self for a tenure not less than five years, with confirmation from the bank for exemption under section 80C.

CEF: Child Education Fees

• Ensure that fee receipts mention Tuition Fees
• Any fees paid under heads like Fees / Education Fees / Quarterly Fees / School Fees / Academic Fees will not be considered. In such cases, an acknowledgment on the school’s letterhead for the actual tuition fees paid must be attached.
• Submit all fee receipts paid for the current fiscal year to date.

EMI: Principal paid through EMI on home loan

• To claim a tax benefit on the principal (part of EMI) amount paid for the home loan under section 80C, attach a Bank Provisional Certificate / Bank Statement mentioning the actual principal paid till 31st Dec 2024.
• Payment schedules will not be accepted.
• In case the home loan is held under joint names, a declaration for the percentage of the benefit being availed by the employee and the joint holder in the respective investment is required (Annexure-5). In the absence of such a declaration, only 50% of the benefit will be considered.