What are Benefits of Taking Plot Loan?
Some of the benefits of availing plot loans are listed below:
- Can be availed for purchase of residential land
- Attractive interest rates
- Affordable repayment tenures
- No pre-payment penalty
- Processing fee is low
- Minimal documentation
- Tax benefit under Section 24 and 80C of Income Tax Act
What is the Eligibility Criteria for Plot Loan?
The eligibility criteria which need to be fulfilled in order to avail a plot loan are listed below:
- Must be a resident Indian
- Should be a salaried or self-employed applicant
- Should be between 18 and 65 years of age
What are the Documents Required to Apply for Plot loans?
Listed below is the list of basic documents which you will need to furnish while applying for a plot loan. The documentation requirements are subject to change depending on the eligibility criteria laid down by different lending institutions.
- Duly filled Application form
- Applicant’s photograph
- Proof of Identity
- Proof of Residence
- Most recent salary slips
- Bank statement for the last 6 months
- Form 16
- Cheque for loan processing fee
Additionally, you may also be required to provide the following documents pertaining to the land.
- Original documents pertaining to ownership of the land
- ‘No Encumbrance’ Certificate for the plot
- Layouts / drawings of the plot, duly approved by the Town Planning Authority.
- Revenue receipts
- Land records
- Tax receipts for taxes paid by the landowner
How to Get Tax Exempted from Plot Loan?
Tax benefits on plot loans can be availed only if you construct a house on the plot. The tax deductions can applicable only when the construction is completed. As per Section 80C of the Income Tax Act, you can avail deduction on the principal repayment component up to a maximum of Rs.1.50 lakh per annum.
You can also get tax benefits on the interest portion of the loan under Section 24 after construction of the house is completed and you start residing in the house. Under Section 24 of the Income Tax Act, you are eligible for an annual deduction of Rs.2 lakh. However, to avail that you need to convert the plot loan into a regular home loan.
In addition to this, you need also avail interest rate deduction and reduced interest rates for pre-construction.