24 February 2009
If a person taken Housing loan from a Bank and paid EMI regularly the interst pard is Rs.66544 for the year but he has paid Pre EMI Interst also of Rs. 8,137 , is it pre EMI interest allowable for deduction .same way he had taken another Housing Loan and paid pre EMI interst of Rs 98974 and next year paid Pre EMI interst 153537 and aid full amount to the Bank, is it allowable for deduction.
24 February 2009
NOw interest is allowed based on payment basis. Therefore you can get the benefit at the time of payment eventhough you have paid pre emi. To that effect you should get certificate from your bankers.
24 February 2009
"Interest on borrowed capital is allowable as deductin on accrual basis..." (Source: Para 39.3 of 29th edition of Singhania's Direct Taxes Ready Reckoner
From the details furnished in Query, it is difficult to express an Opinion. The Querist may however like to take note of the following:
(1) Interest of pre-construction period is deductible in five equal instalments.
(2) The first instalment is deductible in the year in which construction is completed
(3) "Pre-construction period" means the period ending March 31 immediately prior to the date of completion of construction
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