Everyone knows buying a house is not only an investment but also a smart way to save tax. There are various sections under income tax act to save tax in terms of principal repaid and the interest.
Under this section, an individual can save tax on the principal repaid in the current financial year. The overall deduction is limited to 1.5 Lakhs which also includes employee provident fund, public provident fund, national savings certificates, life insurance premiums, tax saving fixed deposits etc.
This section allows you to deduct the interest paid during the financial year from the taxable income. For self occupied property the limit is 2 Lakhs where for let-out property there is no limit.
How to avail tax benefits?
To avail tax benefits, declare your investments in the beginning of the financial year itself so that the TDS(tax deducted at source) would be same throughout the year. You need to submit the investment proofs to your employer at the end of the financial year, otherwise all tax benefits already availed would be deducted from your last month salary(some employers starts this activity in December and the difference is deducted from the salary for the month of Jan, Feb and Mar).
What kind of proofs need to be submitted for home loan?
You need to submit provisional certificate of your home loan account to avail income tax benefits under Section 24(b) and Section 80c. It should contain breakup of the principal and interest paid in the current financial year, otherwise your employer may reject your claim.
How to get provisional certificate for my SBI MaxGain loan account?
One of the most popular home loan product from State Bank of India named MaxGain did not have an option to generate provisional certificate online but few weeks back SBI introduced this option in their online banking portal.
Earlier, to get the provisional certificate, one had to personally visit the home branch. With the online option, by sitting at home, you can generate principal and interest paid certificate against your loan account, which can be submitted as an investment proof.
How to generate MaxGain Provisional Certificate?
First, log into your SBI online account by going to http://www.onlinesbi.com
Now click on the Enquiries tab
On the left side you will see a link named Home Loan Int. Cert.(Prov). This link will take you to the home loan interest paid certificate generation screen. Click the link.
Now select your home loan account(account type will be OD account - Over Draft account) and click the submit button.
This will generate the interest paid certificate on the screen. Scroll down to the bottom and click on View/Download certificate in PDF Format and download the certificate in pdf format.
This certificate contains the following information:
- Name and address of the borrower
- Loan account number
- Date of sanction
- Loan limit
- Actual repayment
- Expected repayment
- Total paid, principal and interest
That's it. Take a printout and submit it to your finance team along with other income tax savings proofs. Now in the comfort of your home or office you can generate the provisional certificate.
Being a nationalized bank SBI has done a good job here, most of the banking features are now available online including opening PPF accounts! Let us know your feedback, feel free to post your comments below, we will get back as soon as possible.Many people reported they are not able to generate provisional certificate for their active O/D accounts, we strongly advise you to check with your home branch if you face any issue generating statement online.
Update: From this year onwards PAN number of the financial institution from where you have availed housing loan is mandatory to get tax benefits from housing loan. You can find PAN number of State Bank of India here.