Tax rebate

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This query is : Resolved

Ronak Shah (Querist)

09 February 2012 Dear Sir

We need a clarification.

We have a Co-Op. Soc at Kolkata which disburses loan to employees for purchase of flat/construction.

Please let us know if the EMI amount recovered are eligible for tax rebate as under.
Interest – Sec. 24b - income/loss from house property
Principal – Sec. 80c – Repayment of housing loan

If you can kindly explain the rules in this regard to enable us convey the same to employees.

CA Navin Jain

CA Navin Jain (Expert)

09 February 2012 Deduction U/s 80C AND 24B is eligible if loan has been taken from the Co Op Society where assessee is the employee of the such Co Op Society.

Ronak Shah

Ronak Shah (Querist)

10 February 2012 Assesse is not the employee of society but he is member of society. This Society is specially formed by our company for providing such type of loans to company's employees

Ronak Shah

Ronak Shah (Querist)

18 February 2012 Any reply ???

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

26 July 2025 Here’s a clear explanation for your situation regarding tax rebates on loan EMIs from your Co-Op Society:

**1. Interest on Housing Loan (Section 24(b))**

* Deduction on interest paid up to ₹2 lakh per financial year is allowed under Section 24(b) **only if the loan is taken for purchase or construction of a residential property**.
* This applies whether the loan is taken from a bank, financial institution, or a Co-Op Society.

**2. Principal Repayment (Section 80C)**

* Repayment of principal portion of the housing loan qualifies for deduction under Section 80C, subject to the overall limit of ₹1.5 lakh per year.
* Again, the loan must be for purchase/construction of residential property.

**3. Who can claim the deduction when loan is from Co-Op Society?**

* If the loan is from a **Co-Op Society** specially formed for employees of the company, the deduction is available **only if the borrower is an employee of the company** and a member of the society.
* Merely being a member of the Co-Op Society (without being an employee) may **not** entitle the borrower to claim these deductions, as per some interpretations.

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### Summary for your employees:

* If the employee has taken the loan from the Co-Op Society formed by the company, and the employee is also a member, then **both principal and interest payments are eligible for deductions under Sections 80C and 24(b)** respectively.
* If the person is just a member but **not an employee**, deductions may **not** be allowed.

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**Recommendation:**

* Ensure that the loan documentation clearly states the employee’s relationship with the company and the Co-Op Society.
* It’s advisable for employees to consult their tax advisor with their specific loan documents.

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If you want, I can help draft a simple communication for your employees explaining this clearly. Would you like me to do that?

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