How to File ITR with Salary Income and Home Loan?

Most salaried professionals rely on housing loans to fulfil their dream of becoming a homeowner. If you are planning to purchase a home or have already purchased one through a loan, you might know that there are multiple tax deductions available on the loan.For instance, you can claim a deduction of up to Rs. 1.5 lakhs on the principal repayment under Section 80C. Similarly, if it is a self-occupied property, you can also claim deductions on the interest portion of repayment up to Rs. 2 lakhs under Section 24 of the IT Act.But in order to be able to claim these deductions, you should be very careful with filing your ITR. If you are a salaried professional currently repaying a home loan , here are the things you should know-

If you are a salaried professional who has taken a home loan for a self-occupied property, you should select "Form ITR-1 Sahaj" for filing your tax returns.
This form is also used by other resident Indians with an annual income of up to Rs. 50 lakhs through salary, a single house property, and other sources such as interest.

The form is divided into five parts- A, B, C, D, and E. In Part A, you are required to enter your personal details such as your name, PAN, Aadhar Number, address, etc. Part D is the automatic computation of your taxes. In Part E, you provide details of your bank account.It is Part B and Part C that deserve your attention.

Looking for how to show interest on home loan in income tax return ? In Part B, you are required to declare your income from the financial year. This is where you also declare the interest you've paid on the home loan. This part of the form is divided into four sections-Take a look-

• B1- Enter your chargeable income under the head Salaries in this section. You can confirm this figure from your Form 16.
• B2- As it is a self-occupied property, tick the appropriate box. You'll also have to enter "Interest Payable on Borrowed Capital" here. Your lender can give you a statement with a detailed breakup of the interest and principal you've paid in the year.In the case of self-occupied properties, the annual value is declared as nil. So, the value will be shown as negative in the B2 column.
• B3- Enter details about your income from other sources, apart from your salary.
• B4- Here, you can find your GTI (Gross Total Income) as per the details you've provided in B1, B2, and B3. (B1+B2+B3=B4)

In this section, taxpayers declare the total deductions they have claimed on the home loan under various sections such as 80C, 80D, 24, etc. Add the total deductions and enter the same in the C1 column.Now, calculate the total taxable income by deducting C1 from B4 (GTI) to know the C2. Before proceeding to the next part, ensure that you cross-check all the details.

If you want to take maximum advantage of all the available deductions on a home loan as a salaried employee, be very careful while filing your tax returns. While filing ITR with a home loan, there is also a provision to claim LTCG or Long-Term Capital Gains Tax . If you have a residential property that is held for over 24 months, then it is considered as Long-Term Capital Gain. The tax levied on LTCG is 20% for real estate properties.However, you are eligible for LTCG tax exemption as per Section 54 and Section 54F if you fulfil the following conditions:

• You buy a new housing property within one year in case of under-construction property or two years in case of the ready-to-move property after the sale of the old property.
• If the construction of an under-construction housing project is complete within three years of the sale of the previous property
• If the total cost of the new residence is higher than the capital gain, then the whole capital gain is tax-exempt.

Now that you know which form to select and how to file tax returns, you can now do the needful without any confusion. But make sure that you always file your tax returns before the deadline. In case of any queries, you can always consult a tax advisor.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.