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Mint
13-05-2025
- Business
- Mint
Why joint home loans could be a smart move for homebuyers
When Laxmi Ahirwar and her spouse decided to buy a house together, they didn't just pool their resources, they unlocked a range of financial perks. A ₹2.5 lakh subsidy under the Pradhan Mantri Awas Yojana (PMAY), a discount on their home loan interest rate, and the ability to double their tax deductions under the old tax regime were just some of the benefits. For many homebuyers, taking a joint home loan can open the door to substantial savings. From enhanced loan eligibility to tax breaks and reduced interest rates, co-ownership, especially with a female co-borrower, can significantly lower the cost of homeownership. Read this | The home loan playbook: Expert tips to save time, stress, and big money But there are caveats to consider, from stricter PMAY eligibility rules to the complexities of exiting a joint loan. Here's a comprehensive look at how joint property ownership can be a smart financial move and the pitfalls to watch out for. Boost loan eligibility, lower interest rates Applying for a home loan jointly can significantly increase your borrowing capacity. Lenders assess the combined income of all co-applicants, allowing for a higher loan amount than if a single applicant were assessed individually. For instance, if Mr A earns ₹1 lakh per month, the bank will approve a loan based on his income. But if his wife, who also earns ₹1 lakh, joins as a co-applicant, the lender can calculate eligibility based on their combined income of ₹2 lakh. This can significantly increase their borrowing capacity. 'Co-applicants can avail higher loan amounts owing to their combined income, which enables them to choose from a wider range of properties. The responsibility of repaying the loan is shared by the co-applicant, reducing the financial stress on a single person," said Arjun Chowdhry, group head - affluent banking, NRI/Cards, payments and retail lending, Axis Bank. Notably, not all co-applicants need to be co-owners. Bank of Baroda allows close relatives to be added as co-applicants to boost loan eligibility, even without ownership rights. Non-resident Indians (NRIs) can also be co-applicants if they hold a stake in the property. 'The most obvious benefit of a joint home loan is that you stand a chance of getting a higher sanctioned loan amount. This happens because the lender now considers two incomes instead of one in the application. So, you no longer need to worry about having to compromise on your ideal home due to a shortage of funds," says the Bank of Baroda website. However, there are exceptions. Jagadeesh Mohan, co-founder of cautions that if the primary borrower's income is sufficient to cover the loan, the co-applicant's income may not be considered. But in case of default, the lender can pursue repayment from both parties. Adding a co-applicant with a strong credit score can also help reduce the interest rate on a home loan. Lenders assess the credit profiles of all co-applicants and may offer more favourable terms if one applicant has a particularly strong credit history. 'If one of the applicants has a stronger credit profile, it can result in better loan terms, including lower interest rates or faster approvals. However, if one co-applicant has a lower credit score, joining a secured loan and maintaining timely repayments can help them improve their credit profile," said Chowdhry from Axis Bank. Some banks also provide interest rate discounts for female borrowers. According to BankBazaar, State Bank of India, HDFC Bank, and Union Bank offer a 5 basis point discount to female primary borrowers, while Bank of India provides a 10-15 basis point reduction. A basis point is one-hundredth of a percentage point. Read this | The home you want to buy already has a loan on it. What should you do? As per Bank Bazaar, once a loan is taken it is difficult to change the primary borrower to a female to get the interest rate discount. Tax benefits of joint home loans For those under the old tax regime, taking a joint home loan can effectively double tax benefits. Each co-owner paying EMIs can claim separate deductions under Section 80C for principal repayment and Section 24(b) for interest paid, said Naisar Shah, director, P.R. Bhuta & Co. Section 80C allows a deduction of up to ₹1.5 lakh annually on principal repayment, which includes other investments like PPF and ELSS. Section 24(b) permits a ₹2 lakh deduction per person on interest payments. If Mr. A buys a property individually, he can claim up to ₹1.5 lakh under 80C and ₹2 lakh under 24(b). But if Mr. A and his spouse jointly take the loan and split the EMI payments, they can each claim these deductions, effectively doubling the tax break. Capital gains exemptions also work in favour of joint owners. Shah noted that when a jointly owned property is sold, both co-owners can each invest up to ₹50 lakh in Section 54EC bonds to offset capital gains. However, the exemption is proportional to their ownership share. For instance, if a property bought for ₹1 crore is sold, and Mr. A and his spouse contributed ₹60 lakh and ₹40 lakh respectively, they can each claim exemptions based on their 60-40 ownership split, said Prakash Hegde, a Bangalore-based chartered accountant. If ownership shares are unclear, tax authorities typically assume a 50:50 split. Additionally, under Section 54, if the proceeds are reinvested in another residential property, both co-owners can claim capital gains exemptions individually. If the gain is under ₹2 crore, the law permits a once-in-a-lifetime option to invest in two residential properties instead of one. Stamp duty and government subsidies Joint ownership can also lower stamp duty costs, especially if one of the co-owners is a woman. Rajeev Kr. Mishra, founder of SRM Legal, said that some states and union territories offer reduced stamp duty rates for female property owners. In Delhi, for instance, the stamp duty is 7% for male buyers but 5% for women. For joint ownership where one owner is female, the rate drops to 6%. 'Maharashtra offers a stamp duty discount of 1% for a woman buyer. However, the criterion is that the buyer should only be woman. In case of a joint property, both buyers should be women," said Harsh Parikh, partner at Khaitan & Co. "States like Delhi and Himachal Pradesh also have remission in stamp duty for a woman buyer. Delhi gives a 1% discount if the joint buyer is a woman." Read this | Mint Explainer: How RBI's latest rate cut, change in stance impact borrowers, depositors Under PMAY, homebuyers can avail subsidies, but only if a female is listed as a co-owner, barring families without an adult woman. According to Mishra, the scheme requires the property to be the buyer's first home, with no other 'pucca" house in their name. Additionally, government employees are excluded from the subsidy. Should you take a joint home loan? Taking a joint home loan, especially with a female co-owner, can unlock multiple financial benefits, from tax breaks to interest rate discounts. But what happens if one co-borrower dies or wants to exit the loan? Kunal Kabra of Kustodian Life said joint ownership can simplify property transfer if one co-owner dies. "If a co-owner passes away, part of the property remains in the surviving owner's name. This makes it easy to continue the utilization of the property during the transfer phase. In addition, the joint holder ends up with a majority holding instead of an equal holding and hence, dispute resolutions are easier. However, there is not much of a difference in the inheritance laws around it," said Kabra. 'The best option is to create a will." Exiting a joint loan, however, can be complicated. Also read | Details on rent, home loan, TDS: ITR forms seek more disclosures this year 'The exit of a co-borrower is a complex process. It requires lender approval and loan closure/refinance, subject to the lender's terms. The bank's decision usually depends on reassessment of whether the borrower can repay the remaining EMI independently. However, the legal and financial liabilities are applicable to both co-borrowers until the loan amount is completely settled, saidChowdhry from Axis Bank.
Time of India
10-05-2025
- Business
- Time of India
How minors can apply for a PAN card; is the process different if you are an NRI minor? Here's a step-by-step guide
The Income Tax Department on May 8, 2025 launched an e-campaign about the importance of having a Permanent Account Number (PAN) card. In the light of this e-campaign, it's important to know all about PAN and especially how young individuals, especially those under 18 years of age can get one. To give you a brief overview, minors can apply for a PAN card with their parents or guardian as their representative, and this is applicable even if the minor is a Non-resident Indian (NRI). #Operation Sindoor India-Pakistan Clash Live Updates| Pak moving troops to border areas? All that's happening Why India chose to abstain instead of 'No Vote' against IMF billion-dollar funding to Pakistan How Pak's jihadi general Munir became trapped in his own vice Read below to get all the necessary information about how minors (those under age of 18) can apply for a PAN card, even if they are an NRI and how much it costs. Can Minors apply and get a PAN card? According to Chartered Accountant Abhishek Soni, co-founder, Tax2Win, 'There is a misconception that a PAN card is only required by individuals above age 18. The minor PAN card is also issued especially for financial transactions, opening bank accounts and making investments under the minor's name.' Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Jesus' Tomb Is Opened And Scientists Find Something Unbelievable Novelodge Undo How can minors get a PAN card in India? According to Sanjoli Maheshwari, Executive Director, Nangia Andersen LLP, Minors cannot apply for a PAN card directly on their own. 'The parents, guardians or Representative Assessee have to apply for the minor PAN card.' The procedure for applying for a PAN card can be hybrid, involving both online and offline physical submission in both the situations – minor is NRI living abroad or minor is Indian resident living in India. Alternatively, if you upload all the documents in the required format and size, then the process can be online for Indians resident minors. Live Events 'In both the modes (partial online and totally offline), the copy of originally signed application form along with all the necessary signed documents and minor's photograph would be required to be furnished at the requisite PAN Centre,' says Maheshwari. 'In case of online mode, the same is filled up online on the official website of NSDL and the supporting documents can either be uploaded online or can be sent via offline means to the PAN centre office. Whereas in case of offline procedure, the form is downloaded and filled up manually and all the necessary documents and minor's photograph and deposition of requisite fee are enclosed with the application form,' she says. Maheshwari says that a PAN card issued to a minor can't have the minor's photograph or signature. 'When the minor turns 18, he/she will need to apply for a new PAN card to get a card with his/her photograph and signature, however, the PAN number will remain the same,' she says. Step-by-Step guide on how to apply for Minor's PAN using Form 49A Here's a step-by-step guide on how to apply for Minor's PAN: Step 1: Visit the NSDL website at Step 2: Click on 'New Application' and then select the PAN type as 'New PAN Indian Citizen ' (Form 49A) and the category as 'Individual'. Step 3: Now type in the minor's personal details and parent's details like address and contact number and upload signature of the parent. Once done click on 'Submit'. A new webpage will open which will ask for more details. Provide the details of the Representative Assessee (parent or guardian) who will sign the form on behalf of the minor and upload the photograph of the minor and the required documents. Step 4: Pay the required fees and then click on the 'Submit' button. After successful payment, an acknowledgement number will be issued. 'If opted for physical document verification, send the complete set to the address provided by the chosen service provider (NSDL Protean or UTIITSL) within 15 days of the online application. This deadline is mandatory to avoid rejection of the application,' says Soni. Source: What are the documents required for a Minor's PAN card? The illustrative list of documents required for a Minor's PAN card application are mentioned as under this table: Particulars Minor is Non-Resident Indian, living abroad Minor is Indian Resident, living in India Proof of Identity (any one of the following) Driving License Passport etc,. Aadhaar card Elector's photo identity card Driving License Passport Ration card etc,. Proof of Address (any one of the following) Copy of Bank Account Statement in country of residence or Copy of Non-resident External (NRE) bank account statements (not more than three months old) Aadhaar card Driving license Passport Post office passbook Voter's ID card Domicile certificate Property registration document, etc Proof of Date of Birth (any one of the following) Birth certificate Passport Matriculation Certificate or Mark sheet of a recognized board Domicile Certificate issued by the Government etc,. Birth certificate issued by the Municipal Authority or any office authorized to issue Birth and Death Certificate by the Registrar of Births and Deaths. Aadhaar card Passport Matriculation Certificate or Mark sheet of a recognized board Domicile Certificate issued by the Government etc,. Source: Nangia Andersen LLP 'As such, in case of a PAN card applied for Minor living abroad, the tax authorities may ask consularised documents attested by the Indian embassy in the Country of residence while processing the application,' says Maheshwari. What is the cost of a Minor's PAN card? According to Soni, the application fee costs Rs 107 if the communication address is in India. Here's a table showing the schedule of other charges (including GST): Mode of Application Submission Mode of PAN Card Dispatch Applicable Fee (Rs ) Offline / Online (Physical Mode) Physical PAN card dispatched within India Rs 107 Offline / Online (Physical Mode) Physical PAN card dispatched outside India Rs 1,017 Offline / Online (Physical Mode) e-PAN card sent via registered email ID Rs 72 Online (Paperless / Digital Mode) Physical PAN card dispatched within India Rs 101 Online (Paperless / Digital Mode) Physical PAN card dispatched outside India Rs 1011 Online (Paperless / Digital Mode) e-PAN card sent via registered email ID Rs 66 Source: Tax2Win Important points to note about Minor's PAN card According to Soni, here are some important points to note about Minor's PAN card: The minor should not sign or affix a thumb impression on the application form. The PAN card issued will bear the minor's name and photograph but will be signed by the Representative Assessee until the minor reaches adulthood. Once the minor turns 18, they should apply for changes or corrections in existing PAN data/ . Reprint of PAN card with their signature and updated photograph. Minor's PAN will not contain their signature. Once the child turns 18, a reapplication is required to update the photograph and signature.
