interest on home loan

This query is : Resolved

sanjeev (Querist)
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24 March 2009 hello everyone
if a home loan is taken by the employee from its employer bank and int charged to employee is less than charged to any normal a customer of the bank.
1)rebate in int is to be treated as perk in the hand of employee.is it correct.
2)whether he can claim the deduction for int on loan. he has acquired home with the amt of loan but till date has not paid any installment for the same.amt of int is accruing in his loan account..
pl. suggest
thanks in advance

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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24 March 2009 Any rebate in interest (i.e. difference between SBI lending rate on 1st April & rate charged to employee) is to be treated as perks in the hand of employee.
In respect of such loan, deduction u/s 24(b) can be claimed to the extend of interest paid (as the section contains the words “payable by assessee”), subject to overall limit of Rs. 30000/ Rs. 150000 ,in case of self occupied property ,and other condition of section 24(b).
Assessee can claim benefit u/s 24(b) for interest on loan on accrue basis, i.e. even interest is actually not paid by assessee, deduction is available to assessee if it accrues to him.
However any interest on the accrue interest is bit allowed .

Regards…………………………………!