Exemption of interest paid on home loan
This query is : Resolved
Rakesh Dubey
(Querist)
03 March 2016
1.)
I have availed home loan from a leading bank and have been making repayment to the builder through EMIs. The possession of the property was provided after 3 years of start of EMI. The interest paid during these 3 years can also be exempted from income-tax in current & future years as follows: max 20% (of total interest paid in these 3 years) is eligible for exemption every year subject to overall limit of 2L.
May kindly confirm the above.
2.)
May please also clarify whether there is an upper limit on the NUMBER OF PAST YEARS for which this exemption is provided. Eg. if the possession is given after 7 years from start of EMI, is the entire interest paid during these 7 years eligible for exemption?
I have availed home loan from a leading bank and have been making repayment to the builder through EMIs. The possession of the property was provided after 3 years of start of EMI. The interest paid during these 3 years can also be exempted from income-tax in current & future years as follows: max 20% (of total interest paid in these 3 years) is eligible for exemption every year subject to overall limit of 2L.
May kindly confirm the above.
2.)
May please also clarify whether there is an upper limit on the NUMBER OF PAST YEARS for which this exemption is provided. Eg. if the possession is given after 7 years from start of EMI, is the entire interest paid during these 7 years eligible for exemption?
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CA Vap Patel
(Expert)
03 March 2016
1) Yes if house is self occupied then you can take 20% of three year interest paid and current year full interest subject to limit of 2lac
2) No such limit is provided in the section
2) No such limit is provided in the section
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Rakesh Dubey
(Querist)
03 March 2016
Thanks for the reply. Does it have to be "self-occupied"? If it is let-out (i.e. given on rent), will the exemption not be considered?
CA Vap Patel
(Expert)
03 March 2016
If it is let out then whatever interest expenses incurred will be allowed as deduction without limit of Rs 2 lac. So 3 year of interest in 20% installment + Current year full interest will be allowed as deduction. Plus 30% standard deduction of rent will be allowed and whatever municipal taxes paid will also be allowed as deduction.
So Gross Rent
Less: Property or municipal tax paid
subtotal
Less 30% standard deduction of subtotal
subtotal
less Interest paid
Net Rent Taxable
So Gross Rent
Less: Property or municipal tax paid
subtotal
Less 30% standard deduction of subtotal
subtotal
less Interest paid
Net Rent Taxable
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Rakesh Dubey
(Querist)
09 March 2016
Thanks for the response Mr. Patel.
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