Deduction u/s 24(ii) of I.T.Act as to Interest on Borrowings

This query is : Resolved

CA Sanjay Baheti (Querist)
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22 June 2010 My Client being an Individual has acquired a house Property meant for exclusively self occupied purposes.

For this Purposes He has taken interest bearing unsecured loans from near & dear relatives. Now query is whether he can claim interest on such borrowings/Loans from relatives under section 24(ii) of I.T.Act or not to the extent of Maximum ceiling of Rs.150000/- on presuming that he has acquired such property after 01.04.1999.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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22 June 2010 Interest payment to friends and relatives can be claimed u/s 24 but only against a certificate received from them. In the absence of the certificate, you would not be eligible for the deduction. The recipient of interest income who issues the certificate is liable to pay tax on the interest income that he receives. As far as the principal payments are concerned, they would not qualify for tax benefit as loans only from notified institutions and banks are eligible for such deductions

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