Interest received from buider for failure of give possession of Flat
This query is : Resolved
Quick Summary
18 February 2024
Hello
Following are my queries
1) Interest received from builder for failure of give possession of flat is Taxable?
2) If the Interest received from builder for failure of give possession is taxable then in which income sources we have to require to report?
3) Any deduction is applicable for above interest receipt?
Following are my queries
1) Interest received from builder for failure of give possession of flat is Taxable?
2) If the Interest received from builder for failure of give possession is taxable then in which income sources we have to require to report?
3) Any deduction is applicable for above interest receipt?
18 February 2024
1. Yes taxable
2. Income from other sources
3. If any legal expenses made to claim such interest.
18 February 2024
I have also 2 more queries:-
1) Where we have to report this interest in income from other sources in ITR?
2) I read somewhere there is 50% deduction assessee can claimed in ITR is it right ?
1) Where we have to report this interest in income from other sources in ITR?
2) I read somewhere there is 50% deduction assessee can claimed in ITR is it right ?
18 February 2024
1. Interest from OThers
2. No you can claim actual expenses only.
17 August 2025
Additional Insights to Strengthen the Response:
The so-called “interest” awarded by builders for delayed possession is actually compensation for breach of contract, not a financial interest payment. Courts have clarified this is not true interest, so Section 194A (TDS on interest) does not apply.
Multiple judicial precedents and tribinal rulings treat such compensation as a capital receipt—not taxable under any income head.
The Supreme Court (June 2025) has ruled builders are not obligated to reimburse home loan interest paid by buyers—only contractual compensation can be awarded.
The so-called “interest” awarded by builders for delayed possession is actually compensation for breach of contract, not a financial interest payment. Courts have clarified this is not true interest, so Section 194A (TDS on interest) does not apply.
Multiple judicial precedents and tribinal rulings treat such compensation as a capital receipt—not taxable under any income head.
The Supreme Court (June 2025) has ruled builders are not obligated to reimburse home loan interest paid by buyers—only contractual compensation can be awarded.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CAPITAL GAIN BASE ON NOTIFICATION
- Unregistered suppliers utility
- NRI starting business in India
- ITDS U/S.194T of Firm
- Difference between Date of Payment and Date of Deduction?
- GST not cancelled by tenant
- Demand Outstanding AY 2013-14 TDS Deducted not shown in 26as
- The TDS balance for March 26 shows a mismatch between the books and the portal; what should be done
- Resigning a auditor from the company for misconduct
- Bank details not Visible on Traces Portal
- Taxable or Tax exempt
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
- LLP audit under companies act
- Experienced CA recommendation from Kolkata for FNO return filing
- Interest Reporting in Form 168
- Sales of goods of amount Rs77 lakhs to a party
- Tax Demand of ₹4,650 for AY 2026-27
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
