22 April 2014
As per Honorable HC order - Supertech has been asked to demolish its 2 40 floor towers in Noida and asked the builder to give 14% interest.
Now assuming someone made a down payment in 2009 for 40 Lakhs using 30 Lakh Bank loan .. his compounded interest would be around 30 Lakhs.
Now My question is -- Will this income come under interest income and be taxable considering below points-
1) This is forced refund to buyers with 14% interest which is much lower than market rate of the flat in that area 2) The buyer has already been paying 10% interest on the home loan 3) The buyer will invest the money in a new property as soon as he gets it
Generally the interest payment received is taxable under the head Income from other sources ... Since this is a home loan , the interest and prinicipal both are eligible for deduction under different sections namely Sec 24 (HP) , Sec 80 C and 80EE (VI A Ded)... now the answer to your question is as follows ... for the diffrential rate which is 4% is taxable under the head income from other sources which is the benefit an individual is getting assuming that he has taken loan @ 10% ... irrespective of his investment in another house he is liable to pay the tax portion on the rest of 4% interest benefit received .... ( w r t Individual Perspective )
22 April 2014
Thanks Uday for the reply.. Since bak loan interest was paid over last 5 years .. can we deduct that interest amount from the refund interest that will be given by the builder..
CAclubindia
