Income Tax Benefit on Home Loans

Principal and Interest payments on home loans are eligible for tax benefits under the Income Tax Act, 1961.

Resident Indians -
Interest repayment of Rs. 1,50,000 per year can be deducted under Section 24(b). This will reduce your tax liability by about Rs. 50,490 per year.

Principal amount upto Rs. 1,00,000 per annum can be availed under Section 80©. This will get you a tax saving upto Rs. 33,660 p.a.

For more information - http://in.taxes.yahoo.com/homeloan.html
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Home Loan Types

There are different types of Home Loans available.

Home Purchase Loans -
Home Purchase loan is used to buy a new or used property.

Home Improvement Loans -
Home Improvement loan is used to improve your home. Purpose of loan is to finance External and Internal Repairs, renovation and any additional construction. They are also called as Home Extension Loans

Home Equity Loans -
Home Equity Loans can be used for any purpose like wedding, education etc.

Bridge Loans -
Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home, until a buyer is found for the home.

Land Purchase Loans -
Land purchase loans are used to purchase any land for construction or investment purpose.

Different banks and lending companies might offer different types of loans. Make sure you understand the difference between the loan types and decide which loan is suitable for you. Each loan type can have different conditions and interest rates.
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Public Provident Fund ( PPF )

This is also called PPF - 15 Year Public Provident Fund. The scheme was introduced by the Central Government of India in 1968.

Individuals can open the account in any branch of State Bank of India, Nationalised banks and in Post Office. Only one account is allowed per person.

Minimum deposit of Rs.500 and a maximum of Rs. 70,000 can be made in 1 year. The duration of Fund is for 15 years.

Rate of Interest :-

Rate of Interest on Public Provident fund is 8% per annum as of 2007.
It is calculated on the minimum balance between 5th and last day of the month.
The interest rate is determined and fixed by the Government.

Tax benefits :-

Deposits are qualified for Income Tax Rebate under section 88 of Income Tax Act.
Deposits are exempted from wealth tax. Interest is tax free under section 80 of Income Tax Act.

Loans on PPF :-

You can avail 25% of amount invested in public provided fund as Loan from 3rd year. Interest is charged at 1% if paid within 36 months and at 6% after 36 months.

Withdrawal :-

You can withdraw from 7th year, but it is limited to one per year.
You can withdraw 50% of balance at the end of 4th year.

You can close the account on 16th Year or can continue for 5 more years with or without contribution.

Types of Banks :-
Public Sector Banks :
- State Bank of India (SBI), Bank of India, Canara Bank, Central bank of India, Corporation bank, Indian Bank, Indian overseas bank, Syndicate Bank, UCO Bank

Private Sector Banks :
- HDFC Bank, ICICI Bank, Federal Bank, ING Vysya Bank, Axis Bank, Yes Bank

Foreign Banks :
- ABN Amro, BNP Paribas, Citibank, HSBC, Standard Chartered

Cooperative Banks :
- Sarasvat, Mahanagar,

Deposits & Accounts :-
All deposits such as Savings Account , Fixed Deposit, Current Account and Recurring Deposits are insured upto Rs 1,00,000 (1 lakh).
Deposits in all banks (even cooperative and private sector banks) in India are insured by Deposit Insurance and Credit Guarantee Corporation (DICGC). The deposit insurance system in India is subject to the Provisions of Deposit Insurance Act

Banking Ombudsman -
If you receive poor service or if you want to complain about a bank, you can contact Banking Ombudsman - Reserve bank of India
List of Banking Ombudsman offices - http://www.rbi.org.in/scripts/AboutUsDisplay.aspx?pg=Ombudsmen.htm

List of Bank Holidays - http://www.rbi.org.in/scripts/HolidayMatrixDisplay.aspx