In India, personal income tax is based on the concept of “pay as you earn” wherein there is a mandatory deduction of tax at source(TDS) from the salary paid to each employee. From Jan employer asks for tax saving Proofs. This article talks about the steps to claim tax benefits on Home Loan Interest, Why Submit the Tax Saving Proofs to your Employer on time, PAN number of the bank or institution from where you have taken loan, Provisional home loan interest certificate.
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Steps to claim Interest on Home Loan Deduction
- An employee can claim home loan interest deduction under section 24C by submitting details to his employer in Form 12BB with proofs such as Ownership details of the property, provisional home loan certificate. you submit your interest on home loan deduction documents to your employer, your employer will adjust your TDS deductions accordingly.
- If you are a Freelancer or you are self-employed – you don’t need to submit these documents anywhere. You use it to estimate your Advance Tax liability for each quarter. You can claim it while filing ITR.
- An employee can also claim the tax deduction on the principal amount under section 80C by submitting details to the employer in Form 12BB along with other tax savings proofs such as PPF, Life Insurance Premium.
- Form 16 will show the tax saving proofs considered by the employer.
- Show Home loan interest as income from House Property while filing ITR. You are not required to submit these documents to the Income Tax Department.
If you don’t submit the proof to your employer, you can claim the Principal and Interest on Home loan while filing ITR and ask for the refund. But that’s delaying the process by at least 6 months. We recommend you to provide the tax saving proofs on time to your employer as stitch in time saves nine and taxes too1
To claim tax exemption on home loan one is required to quote PAN number of the bank or institution from where the loan was taken. The loan providers have now modified their home loan payment certificate which quotes their PAN Number. PAN numbers of some of the popular home loan providers are given below. The entire list banks and NBFCs with their PAN Numbers are here.
- SBI PAN Number – AAACS8577K
- HDFC PAN Number – AAACH0997E
- ICICI Bank PAN – AAACI1195H
Why Submit the Tax Saving Proofs to your Employer
In India, personal income tax is based on the concept of “pay as you earn” wherein there is a mandatory deduction of tax at source(TDS) from the salary paid to each employee. The taxes deducted at source (TDS) are covered under Section 192 of the Income-tax Act, 1961 making it the obligation of the employer to withhold taxes at the time of payment of salaries.
The employer asks for the declaration of tax saving proofs in the beginning of financial year i.e Apr. Since the beginning of the financial year, from 1 Apr, your employer would have been computing taxes on your salary based on the proposed investment declaration submitted by you earlier and deducting Tax.
Usually, from Jan employer asks you to furnish the documentary evidence of having actually made the investments as per the investment declaration made earlier. Once the actual proof is submitted, the accounts department will compute the taxes based on the proofs of the actual investments made by you.You can make tax-saving investments different from those declared by you earlier but the deduction from taxable income will be given only on the basis of the actuals submitted and not on the basis of the proposed declaration made earlier. This will also enable the employee to finalize tax adjustments, if any, in the balance months of the current financial year (2016-17).If taxes have been deducted in excess or less, accordingly, they will get deducted in the last 3 months of the FY. The documents need not be attached or sent to Income-tax Department at the time of tax filing. Instead, it’s the employer who has to receive them from employees and deduct tax accordingly. Our article Income Tax Proof Submission to the Employer discusses tax saving investment/expenditure proofs in detail.
Do not wait till March for saving tax as one could see a huge tax burden in that month and less of take-home pay.
Income Tax Benefits on a Home Loan
Income Tax Benefits on a Home Loan for FY 2016-17 are given in table below
|Interest on home loan
Interest on home loan
|Home has been purchased/constructed within 5 years|
|Section 80C||Principal repayment, stamp duty & registration charges||Upto Rs.1,50,000||Deduction is allowed in the year in which actual principal payment is paid|
|Section 80EE||Interest on home loan||Upto Rs.50,000 ( in addition to Rs 2lakhs)||Loan must be taken between 1st April 2016 to 31st March 2017
Taxpayer should not own any property
Loan from a financial institution
Value of the house must be less than Rs 50 lakhs
Loan must be for less than Rs 35 lakhs.
Documents to claim Income Tax Benefits on a Home Loan
Following documents need to be submitted for claiming the Income Tax benefits on Home loan in form 12BB. Our article Form 12BB for claiming Income Tax Deductions by Employees explaining Form 12BB in detail. Many employers have their own websites to upload the information.
- Provisional Interest certificate from Bank/Financial Institution specifying the break-up of interest and the principal amount. The certificate should also have the loan sanction date and PAN number
- Possession Certificate copy.
- Sale Deed Copy (In case possession letter in not available)
- Lease deed copy, in case of let out property
- In case of Joint Home Loan, self-declaration of the ownership proportion needs to be furnished
- Form 12C
PAN Number of the lender for Home Loan
To claim tax exemption on home loan one is required to quote PAN number of the bank or institution from where they have taken the loan. The loan providers have now modified their home loan payment certificate which quotes their PAN Number. But in case you are not able to find it, here is an alphabetic list of banks or finance institutions with their PAN Numbers.
If you want to check if the PAN Number of the lender is correct, you can do so at Income Tax website for PAN Verification.
PAN number of Banks and Financial Institutions
|Bank/Home Loan Providers||PAN Number|
|Axis Bank Limited||AAACU2414K|
|Bank of Baroda (BoB)||AAACB1534F|
|Bank of India (BoI)||AAACB0472C|
|Bank of Maharashtra (BoM)||AACCB0774B|
|BMW India Financial Services||AADCB8986G|
|Canfin Homes Limited||AAACC7241A|
|Central Bank of India||AAACC2498P|
|City Union Bank Limited||AAACC1287E|
|DCB Bank Limited||AAACD1461F|
|GIC Housing Finance Limited||AAACG2755R|
|HDFC Bank Limited||AAACH2702H|
|ICICI Bank Limited||AAACI1195H|
|IDBI Bank Limited||AABCI8842G|
|Indiabulls Housing Finance Limited||AABCI3612A|
|Indian Overseas Bank (IOB)||AAACI1223J|
|Indusind Bank Limited||AAACI1314G|
|Kotak Mahindra Bank Limited||AAACK4409J|
|L&T FinCorp Limited||AAACI4598Q|
|L&T Infrastructure Finance Company||AABCL2283L|
|LIC Housing Finance Limited||AAACL1799C|
|Oriental Bank of Commerce||AAACO0191M|
|PNB Housing Finance Limited||AAACP3682N|
|Power Finance Corporation Limited||AAACP1570H|
|Punjab & Sind Bank||AAACP1206G|
|Punjab National Bank (PNB)||AAACP0165G|
|State Bank of Bikaner and Jaipur (SBJJ)||AADCS4750R|
|State Bank of Hyderabad (SBH)||AADCS4009H|
|State Bank of India (SBI)||AAACS8577K|
|State Bank of Mysore (SBM)||AACCS0155P|
|State Bank of Patiala||AACCS0143D|
|TATA Motors Finance Limited||AACCT4644A|
|The Karnataka Bank Limited||AABCT5589K|
|The South Indian Bank Limited||AABCT0022F|
|Union Bank of India||AAACU0564G|
|United Bank of India||AAACU5624P|
|YES Bank Limited|
Provisional Home Loan Interest Certificate
The interest certificate from the bank or financial institution, specifying the break-up of interest and the principal amount for a financial year is required. A sample provisional home loan certificate showing break-up is given below.
Actual repayment is one that is the amount paid by the person who has taken the loan, from Start of the financial year(ie Apr) to the time of generating the certificate.
Expected repayment is amount one is expected to pay from the day of generation of the certificate to the Mar 31 i.e end of financial year
Most of the banks now provide the provisional home loan certificate through net banking. For example, if one has taken home loan from SBI one can view/download Interest Certificate (Provisional) of their home loan account(s) by following the steps given below. The certificate can be viewed online, printed or downloaded in pdf.
- Logging to Internet Banking site with your credentials
- Select Enquires Tab
- Select the “Home Loan Int.Cert (Prov)” link under “Enquiries” tab. Then select the account for which you require a Home Loan Interest Certificate.