Save Rs 588 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Interest on building loan

Save Share

This query is : Resolved

Quick Summary

You can capitalise interest paid on a construction loan up until the date the building is completed. After completion, any interest paid on the loan must be treated as a business expense. This distinction is important for maintaining profitability and meeting bank requirements for loans and overdrafts.

sampajis@gmail.com

sampajis@gmail.com (Querist)
Follow

18 July 2025 My cleint has constructed a shop used for business.
Int paid on loan nealry 20 lakhs
Can we capitalise that interest before and after construction??
Because if I show it as bus.exp, profit will zero
Then bank OD,loan purpose get difficult

Pls suggest

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

18 July 2025 You can only capitalize interest paid over construction loan till the date of completion. After that it is been treated as revenue expenditure.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

26 September 2025 Good luck...

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now