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Is interest on personal loan available under Sec.24b

aksahy (articleship) (25 Points)

01 November 2011

whether interest on personal loan use for construction of house property(Self Occupieed) is available as deduction under head rental from house property? Pls. help

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10 Replies

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 01 November 2011

Yes. But no deduction is available under section 80C for principal repayment.

This is the uniqueness.

valji (Accounts manager-MBA) (2150 Points)
Replied 01 November 2011

no deduction is avliable

GOPAL AGGARWAL (DOING NOTHING) (1339 Points)
Replied 01 November 2011

Interest will be allowed as deduction but in my view there should be nexus in raising of presoanl loan and construction of House. Because If you have old personal loan and now if you want to claim dedction after constructing house you cannot do so. so nexus is necessary

Please suggest and help me if I am wrong

Jitender (Chartered Accountant) (8724 Points)
Replied 01 November 2011

As per the third proviso of sec24(b), deduction of interest is allowable only on the production of the certificate of the interest payment & capital borrowed for the purpose of construction/ purchase.

Following the above proviso, if u can manage this certificate from the lender, then u can claim the deduction otherwise, it will not be allowable.

*RENU SINGH * (✩ §m!ℓ!ñġ €ม€§ fℓม!ñġ ђ♪gђ✩ ) (21627 Points)
Replied 01 November 2011

Originally posted by : valji
	no deduction is avliable

because deduction is avalible on such loans which are specifically purchased for construction of house.
So personal loans doesn't come in this category.

So how can a deduction be claimed in regard of House property ?

VISHAL SINGH (Chartered Accountant) (71 Points)
Replied 01 November 2011

Agree with Mr. Jitender

ALPESH KUMAR (SUPRITENDENT) (140 Points)
Replied 08 December 2011

Agree with jitedra. I think, there no constraint in section 24(b) on acceptance of loan only from bank or financial institution. one may take loan from individuals and private firms subject to the production of certificate regarding purpose of loan and other documentary evidence regarding utilization of such loans towards housing construction.

Please suggest ur valued comments.

ALPESH KUMAR (SUPRITENDENT) (140 Points)
Replied 08 December 2011

Please suggest ur valued comments.

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 09 December 2011

1.U/s 24(b)

For Claiming Interest payable on borrowing capital

Loan is taken from any person (Individual, Company,Housing board etc..!!)

2. U/s 80C

For claiming repayment of principal amount

Loan must be taken from specified persons

(1) the Central Government or any State Government,

(2) any bank, including a co-operative bank, or

(3) the Life Insurance Corporation, or

(4) the National Housing Bank, or

(5) any public company (the business of providing long-term finance for construction or purchase of houses in India)

(6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

(7) the assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

(8) the assessee’s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society;

9. self-financing or other scheme of any development authority, housing board

Not from individual (Individual not mention above )

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