Tips To File ITR How You Can Save IncomeTax On Home Loan
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Importance of Filing ITR
Filing an Income Tax Return is mandatory for many and beneficial for all. It serves as a legal record of your income and taxes paid and helps when applying for loans, visas, and even during financial planning.
Key Reasons Why Filing ITR is Important:
It is a legal requirement under the Income Tax Act, 1961.
Helps in availing refunds if excess tax is paid.
Required for loan approvals (home loans, personal loans, business loans, etc.).
Useful when applying for a visa to countries like the USA, UK, and Canada.
Proof of income for freelancers, self-employed, and small business owners.
Who Should File ITR?
As per the Income Tax Act, every individual whose income exceeds the basic exemption limit must file an ITR. Here’s a breakdown of who must file:
Individuals below 60 years: Income exceeding ₹2.5 lakh
Senior citizens (60-80 years): Income exceeding ₹3 lakh
Super senior citizens (above 80 years): Income exceeding ₹5 lakh
Additionally, individuals with:
Foreign assets or income
Tax deductions under Section 80C, 80D, etc.
Capital gains from shares, mutual funds, or real estate
Income from more than one source (salary + rental, etc.)
Tips to File ITR Correctly
Filing ITR may seem complex, but with proper steps, it becomes smooth and accurate. Here are the most important tips to file your ITR without errors:
1. Collect All Financial Documents
Before filing, gather the following:
Form 16 (issued by employer)
Form 26AS (tax credit statement)
Interest certificates from banks
Investment proofs
Property documents (for home loan interest/principal)
PAN, Aadhaar, and bank details
2. Choose the Correct ITR Form
ITR forms vary depending on income source. For example:
ITR-1: Salaried individuals with income up to ₹50 lakh
ITR-2: Individuals with capital gains or foreign income
ITR-3: Business income
ITR-4: Presumptive income (business or profession)
3. Verify Form 26AS and AIS
Make sure that the Form 26AS and Annual Information Statement (AIS) match with the TDS entries and financial transactions.
4. Claim All Deductions
Ensure you claim all eligible deductions under sections like:
Section 80C (LIC, PPF, EPF, etc.)
Section 80D (Health insurance)
Section 24(b) (Home loan interest)
Section 80EEA (Additional home loan interest)
5. Report All Sources of Income
Include interest income, rental income, and capital gains even if TDS has been deducted.
6. Validate and E-Verify Your Return
Always e-verify your ITR using Aadhaar OTP, Net banking, or by sending a physical signed copy to CPC Bengaluru.
Benefits of Filing Income Tax Returns
Helps in processing tax refunds
Easier loan approvals for home, car, or business
Acts as proof of income
Helps in visa applications
Shows financial credibility
How You Can Save Income Tax on Home Loan
Home loans not only help you own a house but also offer significant income tax benefits. If you are paying a home loan EMI, you can reduce your taxable income substantially.
Home Loan EMI is divided into:
Principal component (eligible for deduction under Section 80C)
Interest component (eligible for deduction under Section 24(b) and Section 80EEA)
Home Loan Tax Benefits Under Different Sections
Let’s understand the various sections that allow you to save tax on home loans:
1. Section 80C – Deduction on Principal Repayment
Maximum deduction: ₹1.5 lakh per annum
Includes stamp duty, registration charges (one-time, if paid during the same year)
Applies only after possession is taken
Property must not be sold within 5 years
2. Section 24(b) – Deduction on Home Loan Interest
Maximum deduction: ₹2 lakh per annum (for self-occupied properties)
For let-out properties, the entire interest amount is allowed (subject to loss cap of ₹2 lakh)
Loan must be taken for purchase/construction of the house
Construction must be completed within 5 years
3. Section 80EE – Additional Deduction for First-Time Buyers
Deduction: Up to ₹50,000
Conditions:
Loan amount should not exceed ₹35 lakh
Property value should not exceed ₹50 lakh
The loan must be sanctioned between April 1, 2016 and March 31, 2017
4. Section 80EEA – Additional Deduction under Affordable Housing
Deduction: Up to ₹1.5 lakh (in addition to Section 24)
Available to first-time buyers
Loan must be sanctioned between April 1, 2019 and March 31, 2022
Property value should be within ₹45 lakh
Tips to Maximize Tax Savings on Home Loan
1. Apply for Joint Home Loan
When you take a joint home loan (e.g., with your spouse or parent), both co-borrowers can claim tax benefits individually:
₹1.5 lakh under Section 80C (each)
₹2 lakh under Section 24(b) (each)
2. Include Registration and Stamp Duty
Don’t forget to include registration charges and stamp duty as part of Section 80C if paid in the same financial year.
3. Claim Pre-Construction Interest
If your house is under construction, you can claim interest paid before possession in 5 equal installments after getting possession.