Bank Theory

Home Loans, Housing Finance & Tax Planning - Bank Theory Additional Reading Material on Home Loans, Housing Finance and Tax Planning 1. Home Loans Overview Home loans are secured advances provided by financial institutions to individuals for the purchase, construction, renovation, or extension of residential properties. These loans are generally long-term, repayable over 10 to 30 years with fixed or floating interest rates. Example: Mr. Sharma takes a home loan of ₹50 lakhs at an interest rate of 8.5% p.a. for 20 years. The EMI will consist of both interest and principal components, and over time, the principal component increases while the interest component reduces. 2. Housing Finance and Tax Planning Housing finance plays a dual role in meeting shelter needs and enabling tax planning. A borrower can optimize tax liability using tax deductions available under the Income Tax Act for both the interest and principal portions of the EMI...

Tax Planning - Bank Theory Tax Planning 1. Classification of Tax Structure in India India follows a dual tax structure comprising: Direct Taxes (e.g., Income Tax, Corporate Tax) Indirect Taxes (e.g., GST, Excise, Customs Duty) 2. Financial Year, Assessment Year & Previous Year Financial Year (FY): Period from 1st April to 31st March when income is earned. Assessment Year (AY): The year following the Financial Year when the income is assessed and taxed. Previous Year: Same as Financial Year – the year in which income is earned. 3. Residential Status The residential status determines the scope of taxable income. It is categorized into: Resident and Ordinarily Resident (ROR) Resident but Not Ordinarily Resident (RNOR) Non-Resident (NR) 4. Important Terms Gross Total Income: Aggregate income before deductions. ...