Interest on building loan

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This query is : Resolved

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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)
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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)
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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)
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26 September 2025 Good luck...

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