deduction on EMI for loan

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SATPAL SINGH (Querist)
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23 February 2009 i took loan for purchase of plot with a condition to start construction within two years. my query is i can claim deduction of principal amount in EMI from the year in which i took loan or can i claim it when i start my construction and also upto wat period if time.

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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23 February 2009 Yes, for the principle portion of emi you are repaying you can claim the deduction, however interest you have to carry over and after completion of the building you can cliam in 5 equal installments.

K V Subba Rao

K V Subba Rao (Expert)
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24 February 2009 (1) Principal repayment: We find different views expressed by Experts as per following examples:

(a) In the Artcile available in the following link, Deduction can be claimed only "...from the financial year in which ... construction is completed"

http://economictimes.indiatimes.com/Personal-Finance/Tax-Savers/Tax-News/Tax-aspects-of-Income-from-House-Property/rssarticleshow/3495330.cms?curpg=2

(b) In the Artcile available in the following link, "...for claiming deduction u/s 80C for principal amounts out of borrowed home loan, there is no need of completion of construction"

http://www.taxworry.com/2007/05/is-completion-of-construction-necessary.html

So if your Query relates to a practical situation, you be prepared for disallowance for Principal repayment made in finanical years preceding the one in which construction is completed

(2) Interest: There is no ambiguity with regard to Interest relating to pre-construction period. This aspect is discussed in very detail in Articles available in both the above links

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