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Itax rebate on home loan processing charges

24 July 2015

Can we get Income Tax rebate on Home loan processing charges U/s 24 as reabte on home loan interest ? Also from time to time bank offers redcution in interest rate by updating the spread factor for which Bank charges processing fee. Can that be also considered as part of Home Loan Interest and reabte can be claimed U/s 24 ?

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10 Replies

Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 24 July 2015

NO, processing and other bank charges do not qualify for deduction under section 24. If you are making a lumpsum fee for reduction of interest rate or to move from fixed to flaoting etc. we can justify the same as part of interest/borrowing cost. But not the initial processing fees

1 Like

Tarun (AM) (216 Points)
Replied 24 July 2015

There is no provision for claiming processing charges as your deduction.

1 Like

CA D.C. Bansal (Accounts Head) (283 Points)
Replied 24 July 2015

No, processing charges are not eligible for deduction u/s 24.

1 Like

Z ( ) (2960 Points)
Replied 24 July 2015

DEDUCTION IS AVAILABLE

May I know why it can not be claimed as a deduction?

We all agree that under 24b deduction is on account of interest and interest has been defined

""interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised ;"

[ I had only above to support my view point but thanks to Deepak Gupta , who bought to my notice certain decision in support of this view point]

Pentagram Properties Private Limited vs. DCIT [ITAT mum] (in this case processing fees was of 55 Lacs)

Download

Chintamani Hatcheries (P) Ltd. vs. DCIT (2000) 75 ITD 116 (Pune) (SMC)

held that processing fee for obtaining a loan is a service fee and has to be allowed as interest in view of the definition in section 2(28A)

DO NOTE that inorder to claim deduction u/s 24(b) you have to produce the certificate from the person you have borrowed the money, insist them to give details of ALL the expenses charged by them , if that certificate does not include this processing charge or service charge or any other fees etc then the AO might not give you deduction for that.

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Z ( ) (2960 Points)
Replied 24 July 2015

Found the thread

/forum/details.asp?mod_id=280758&offset=2

Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 24 July 2015

The definition of interest stated by you, where is this definition.can you please clarify

Z ( ) (2960 Points)
Replied 24 July 2015

S.2(28A)

1 Like

Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 25 July 2015

GoodPoint made Mr Z

Vishwajeet Kamal (Others) (66 Points)
Replied 26 July 2015

So, should I declare processing fee and fee paid for reducing the Rate of Interest as Home Loan Interest paid for Income Tax rebate ?

Z ( ) (2960 Points)
Replied 26 July 2015

Yes, but I reiterate

"DO NOTE that inorder to claim deduction u/s 24(b) you have to produce the certificate from the person you have borrowed the money, insist them to give details of ALL the expenses charged by them , if that certificate does not include this processing charge or service charge or any other fees etc then the AO might not give you deduction for that."