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Pre-emi interest (Income Tax)

This query is : Resolved

Divya Karthik

( Author )
04 February 2013

Dear EXPERTS,
I have paid a total of 108000 as pre-emi interest for the FY 2012-2013.The construction of my house will get completed by 31st March 2012.

Can i claim the pre-emi interest for the the AY 2013-14?

Kindly advise.

@VaibhavJ

( Expert )
04 February 2013

Hey

Yes you can claim deduction in full for whole interest paid for FY 2012-13.

Condition for availing deduction of interest is that construction should have completed in the fy.

Thanks!!

Divya Karthik

( Author )
04 February 2013

The whole of interest paid or 1/5th of the total paid?

@VaibhavJ

( Expert )
04 February 2013

Hey

The whole of int. paid for FY.2012-13 can be claimed. Once construction gets completed int payable for FY 2012-13 is no longer pre-eml.

Any Int. paid prior to 1/4/2012 is called pre-emi, which can be claimed in 5 installments.

Total deduction of 1/5 of pre emi int. & Int. payable for FY 2012-13 should not exceed 1.50 lacs if property is self occupied.

Thanks!!

Divya Karthik

( Author )
04 February 2013

is any proof to be submitted while filing the roi?

Divya Karthik

( Author )
04 February 2013

But the construction gets completed only on 31st March 2013.So,the interest l aready paid upto 31st march 2013 ie.the whole of it can be claimed while filing ROI on or before 31st July 2013.Correct?

@VaibhavJ

( Expert )
04 February 2013

Hi

No proofs to be submitted..

Thanks!!

Divya Karthik

( Author )
04 February 2013

But the construction gets completed only on 31st March 2013.So,the interest l already paid upto 31st march 2013 ie.the whole of it can be claimed while filing ROI on or before 31st July 2013.Correct?

Dintakurthi Tirumala

( Expert )
04 February 2013

If your construction completed on or before 31-3-2013 then you shall claim all of interest amount in the A.Y.2013-14 only.

OM SAI SRI SAI JAI JAI SAI

@VaibhavJ

( Expert )
04 February 2013

Hey Divya,

If you have take loan prior to 1 Apr 2012, Then Int up to 31 Mar 2012 will go into pre - emi bucket & Int for period 1 Apr 12 to 31 Mar 13 will go in current fy bucket.

So whole int for fy 2012-13 can be claimed while filing ROI.

Thanks!!

Divya Karthik

( Author )
04 February 2013

Dear Sir,
I have taken the loan in may 2012.And paid pre-emi interest upto 31st march 2013.So what is the amount qualified for deduction for AY 2013-14?

Thanks

Dintakurthi Tirumala

( Expert )
04 February 2013

Then whole of the amount of interest paid is allowable as deduction in the A.Y 2013-14 return of income.

OM SAI SRI SAI JAI JAI SAI

Divya Karthik

( Author )
04 February 2013

Dear Experts,
I was told that i can claim the interest paid by me upto the date of completetion of the construction in 5 equal annual installments.Is it true?

Kindly help

@VaibhavJ

( Expert )
04 February 2013

hey

no its not true..

Pl refer S/24 of IT for details:

Thanks..

Divya Karthik

( Author )
04 February 2013

Dear sir,
Extraxts from Sec 24
@Explanation.—Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years:]

Kindly clarify

Divya Karthik

( Author )
04 February 2013

In the above extract, @property acquired or constructed" means the date of completion of construction right sir?

Kindly advice

Divya Karthik

( Author )
04 February 2013

dear experts
kindly help on my query

@VaibhavJ

( Expert )
04 February 2013

hi

yes its date of completion ..

Thanks!!

Divya Karthik

( Author )
04 February 2013

so, sir,
i can claim only 1/5th of interest paid by me right?

@VaibhavJ

( Expert )
04 February 2013

No you are entitle to whole int. amount as deduction as per explanations given above.

Thanks!!

Divya Karthik

( Author )
04 February 2013

Vaibhav Sir,
So when is 1/5th installment applicable?Im confused.

@VaibhavJ

( Expert )
04 February 2013

Hey

Pre-EMI comes in to picture in your case when you have taken loan before 1/Apr/2012.

So int paid upto 31 Mar 2012 is pre-emi & int paid after 31 Mar 2012 is regular one.

Thanks!!

Dintakurthi Tirumala

( Expert )
04 February 2013

Dear divya karthik don't go confusion clarification for your doubt is.

If the loan taken financial year and construction completions or property acquired year is different then only the question of 1/5th interest arises and interest paid upto the immediate completion of financial year before to the financial year of construction completed shall be claim deduction of 5 equal installments.

So in your case loan acquired and construction completion year is same so no question of 5 installments deduction of pre-EMI interest.
Are you clarified ?

OM SAI SRI SAI JAI JAI SAI

CA AYUSH AGRAWAL

( Expert )
09 February 2013

Dear Author,

Since You mentioned, Construction Will Complete on 31/03/2013,
In This Case, Interest For F.Y. 2012-13 and From That Will go in Current Interest.

and interest Paid Till 31/03/2012, Will go in PreEMI Interest. That 1/5th Allowed from the F.Y. 2012-13 Year.