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ABDUL KHALIQ (Querist)
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12 January 2014 Dear Friends Pl clarify how to treat the interest during construction of house if the house is completed with the same financial year of taking loan from bank. Wheather to take full interest for exemption or it should be at 1/5 each for 5 years.

CA TSR

CA TSR (Expert)
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12 January 2014 Dear tax payer, As per Section 24 of Income Tax Act you get full amount of interest paid or payable to borrower as deduction.

For your understanding i am giving u one small example -

Loan 100000/- int. rate 12% p.a. Loan taken on 01.04.2012 and construction started on 03.04.2012 construction completed on 05.10.2013

Interest paid during FY 12-13 is 12000 and during FY 13-14 is also 12000 (assume)

Then interst allowed in IT return for the AY 1$-15 is as follows :

Pre-construction interest (12000/5 FY 12-13) 2400.00 and

General interest on housing loan 12000

Total interest allowed U/s. 24 for the asst. year 14-15 is 14400/- (i.e. 12000+2400) as calculated above.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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12 January 2014 Preconstruction period ends with the prior March from the year of construction/acquisition completed, since your case same year construction completed, preconstruction interest is Nil. you can take normal deduction u/s.24b

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