There are various documents you would require in order to apply for a home loan. While the paperwork eliminates the chances of default and fraud, it also acts as proof for both the parties – the lender and the borrower, whenever needed. Where some documents indicate your repayment capacity, many documents also act as proof that you have repaid the loan amount. One such document is a provisional certificate. A provisional certificate forms a part of the loan statement and is necessary to claim tax deductions on your housing loan.
Read on to know what a provisional certificate is and why you need it.
What Is a Provisional Certificate?
A provisional certificate is a legal document that proves that you have repaid the loan in full. It provides a summary of the principal and interest component of the home loan you have paid in the current financial year. You can also obtain the provisional certificate at the beginning of the year that would indicate the amount payable for the year.
How Do You Obtain a Provisional Certificate?
You can get the home loan provisional certificate from your lender. You can visit the lender’s branch and submit a request form with the necessary documents like a PAN card, while providing details like loan number, DOB, etc., for the same. However, almost all banks have an online presence and allow customers to access their home loan details online. All you need to do is visit the lender’s website, log in and access your provisional certificate, home loan statement, etc. There are no charges for obtaining the provisional certificate.
Following is the step-by-step process of obtaining your provisional certificate:
Step 1: Visit the lender’s website
Step 2: Click on ‘login’ and enter your login credentials like home loan number, DOB, EMI amount, loan amount, etc.
Step 3: Click submit
Step 4: Now, you can access your loan summary, provisional certificate, etc.
You can also obtain it by requesting for it on the lender’s toll-free customer care number.
Why Do You Need a Home Loan Provisional Certificate?
You need a provisional certificate to claim the tax deductions on home loans. As per the Income Tax Act 1961, you can avail a tax deduction of up to Rs 1.5 lakh on the principal repayment under section 80C. Similarly, you can also claim the deduction of the interest repayment up to Rs 2 lakh from your income under section 24 (b). For claiming these deductions, you will need to furnish this provisional certificate to your employer.
A provisional certificate helps you prove the repayment of the loan that comes in handy while availing debts in future. It also helps you keep a tab on your loan activities.
Along with documents like No Dues Certificate and loan statement, your home loan provisional certificate is a vital document that you must have with you. It is not only helpful for you to prove that you have repaid the loan but it is also mandatory for claiming a tax deduction. Now that you know, what a provisional certificate is, contact your lender and obtain yours now!