Basics of the tax .....

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Home Loan – Deduction against Interest and Principal repayment

Deduction for Interest and Principal repayment of home loan under the Income tax Act, 1961

As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 150,000 towards the total interest payable on the home loan towards purchase / construction of house property can be claimed while computing the income from Self Occupied house property.

The interest payable for the pre-acquisition (possession) or pre-construction period would be deductible in five equal annual installments commencing from the year in which the house has been acquired (possession obtained) or constructed.
However, the amount of interest paid during the financial year in which the construction/ acquisition is completed will not be treated as pre-acquisition interest as stated above. As such, this part of the interest paid will be allowed as deduction from ‘income from house property’ in full in the relevant assessment year, subject to the maximum limit, as may be applicable in this regard.

The amount of principal repaid during the pre-construction/ pre-acquisition period is not subject to such restriction, and will be allowed for the purpose of deduction U/s 80 C as and when paid.

Some other points to remember:

o The interest certificate is essential from the lending institution to claim the tax benefit on interest payments.
o In case of self occupied property, this deduction is allowed only for one such self – occupied property.
o The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house
property is eligible for deduction under section 24(b).
o Deduction for the stamp duty, registration fee and other expenses incurred for the purpose of transfer is also
covered U/s 80 C.

Replies (47)

 

Home Loan – Deduction against Interest and Principal repayment

Deduction for Interest and Principal repayment of home loan under the Income tax Act, 1961

As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 150,000 towards the total interest payable on the home loan towards purchase / construction of house property can be claimed while computing the income from Self Occupied house property.

The interest payable for the pre-acquisition (possession) or pre-construction period would be deductible in five equal annual installments commencing from the year in which the house has been acquired (possession obtained) or constructed.
However, the amount of interest paid during the financial year in which the construction/ acquisition is completed will not be treated as pre-acquisition interest as stated above. As such, this part of the interest paid will be allowed as deduction from ‘income from house property’ in full in the relevant assessment year, subject to the maximum limit, as may be applicable in this regard.

The amount of principal repaid during the pre-construction/ pre-acquisition period is not subject to such restriction, and will be allowed for the purpose of deduction U/s 80 C as and when paid.

Some other points to remember:

o The interest certificate is essential from the lending institution to claim the tax benefit on interest payments.
o In case of self occupied property, this deduction is allowed only for one such self – occupied property.
o The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house
property is eligible for deduction under section 24(b).
o Deduction for the stamp duty, registration fee and other expenses incurred for the purpose of transfer is also
covered U/s 80 C.

Thanks for sahring...................

 

Section 80c vs. 24(b)

Section 80C provides tax deduction for the repayment of the principal sum, 
section 24(b) provides tax benefit on the interest portion of the loan.


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