Personal loan interest benefit

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POOJA SHARMA (Querist)
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03 June 2016 Ma dad took PERSONAL LOAN from a bank for purchasing the house (he couldnt get home loan). House is in my mom's name but payment is made by my dad. Can he claim benefit of interest (under house property) while filing return.
He is a salary person.

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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03 June 2016 No. Only interest on home loan is tax deductible.

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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04 June 2016 as per my opinion, the interst on borrowed fund is allowed as deduction u/s 24. pls note section 24 does differenciate between home loan or other borrowed capital. even if u have borrowed capital form private party , you can claim deduction under section 24 . however your father will not be eligible for deduction u/s 80 C for repaymnet, because 80C deduction is available on home loan.it does not matter, wheather the house is in the name of father or mother

Prakash Kochar

Prakash Kochar (Expert)
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04 June 2016 Interest on loan taken for purchase of house is eligible for deduction under had of House property income. Restriction for claim of deduction u/s. 80C of repayment of housing loan is allowed only if relates to housing loan.

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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04 June 2016 Sunil ji,

While the Act doesn't specify that interest on home loan only is tax deductible, if the assessee claims tax deduction, the Department may ask for explanation regarding the end use of personal loan. So, I believe if the assessee could get the same on record he may go ahead.

And I second your and Prakash ji opinion that principal repayment is tax deductible under 80C only for home loans from banks and housing finance companies.

Prakash Kochar

Prakash Kochar (Expert)
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04 June 2016 Nexus of investment of amount taken by way of loan for House is important and it is assumed from query that loan is taken for investment in house property,therefore interest on amount borrowed will be deductible under head of Income from House property.

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