Home Loan Provisional Certificate: Complete Guide

Most buyers now rely on housing loans for fulfilling their dream of being a homeowner. With real estate prices going through the roof, a housing loan makes it easier for the buyers to purchase a property with the borrowed amount and then repay the lender through EMIs.As home is a basic necessity, the government also offers various tax benefits on housing loans . But the deductions can only be claimed when you submit all the required documents. One such document is the interest certificate. Here are a few important things you should know about this certificate-

Tax benefits on home loans are available on the interest component and the principal component of the EMI amount a borrower repays to the lender. It is important to know the exact principal and interest amount a borrower has repaid in a financial year for claiming the deductions.The interest certificate is a statement with a detailed break-up of the interest and the principal amount a borrower has repaid to the lender in a financial year. It functions as proof of repayment by the borrower. At the time of filing tax returns, borrowers are required to submit this interest certificate for claiming the tax deductions successfully.

As per the IT laws, home loan borrowers can claim a deduction of up to Rs. 2 lakhs on the interest they have paid to their lenders in a financial year. If it is a self-occupied property, they can also claim a deduction of up to Rs. 1.5 lakhs in a financial year against the principal amount repaid to the lender.In both cases, borrowers need to submit the loan interest certificate at the time of filing tax returns to claim the deductions.

It is very common for borrowers to get confused between an interest certificate and a provisional certificate. While both are detailed statements of repayment, there is one significant difference. As mentioned above, the interest certificate is given at the end of the financial year. It provides details of the interest and the principal amount a borrower has repaid to the lender in a financial year.The provisional certificate, on the other hand, is provided at the starting of a financial year. It offers a detailed break-up of the interest and the principal amount a borrower has to repay to the lender in the financial year.

You can visit the lender and request the home loan interest certificate. It will mostly be sent to your address through post. Alternatively, many of the lenders now allow the borrowers to download this certificate from their official website.You can visit the official portal of your lender and log into your account to download the certificate. If the download option is not available, the certificate can also be sent to your registered email address. Download this certificate and attach this digital copy at the time of filing your tax returns.

It is mandatory for the borrowers to submit the interest certificate at the time of filing ITR to claim the deductions. You can visit your lender or check their official website to know more about this certificate and how you can request the same.If you are new to filing tax returns, consider professional assistance to avoid errors and take advantage of all the different deductions and exemptions.

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.