Construction of House property

80EEA is applicable to loans sanctioned between 1-4-2019 to 31-3-2022 for purpose of acquisition of a residential house property. Pls. check eligibility. 

Interest deduction upto Rs. 2 lakh is eligible under section 24 for self occupied properties and additional Rs. 1.5 lakh under section 80EEA . 80EEA deduction to my knowledge is only allowed for home loan interest. 

Section 24 deductions are available for loans taken for acquiring, construction, repairing, renewing or reconstructing with borrowed capital. So the the type of borrowing is not specified - home loan or personal loan. However a certificate will have to be furnished from the lender. Also non availability of receipt can be an issue as there is no proof of utilisation of funds for housing/ renovation purpose.

Cannot help on the 1st part though.

Hii Josh. Thanks for responding. Plse read my view below and tell me what u think.

"80EEA. [1] In computing the total income of an assessee, being an individual not eligible to claim deduction under section 80EE, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property"

Here it is saying interest payable on loan taken for the purpose of acquisition of HP. What does purpose implies here..? I used the loan for HP only. Is it mandatory to mention in the loan document about House property..? Can't we interpret that the purpose of usage of loan should be for House property and claim 80EEA

Is this for general understanding. In the original post, you have mentioned that housing loan of 21 lakh is taken for property worth 20 lakh. So ideally any further loan cannot be claimed towards acquisition of house property.

I think in this case there is a possibility of difference in interpretation of law. What the section is saying is that, loan taken from any financial institution should be for the purpose of acquisition of a residential house property. Personal loans cannot be considered as loans for purpose of acquisition (though it might actually be used). So there is a possibility of the deduction being disallowed. You will have to check if there is any case law on this for surety.

In original post I said, 20 lacs for HP. And before occupying, remodelling was done Worth 15 lacs. After everything only the property was occupied. And housing loan of 21 lacs used for HP purchase and personal loan used for remodelling. Assuming remodelling can be treated as Improvements, I think interest on the loan used for such remodelling can be claimed.

ok forget about my interpretation. Under 24b, it just said borrowed capital. There are no specific words in 24b like in 80EEA. What if I claim personal loan interest under 24b and housing loan under 80EEA. Will that me logical...?

Yes there is no category of loan specified in 24b. It just says borrowed capital.

What about 80C. Can I claim both principal paid on housing loan and personal loan..?

Section reads as

"[xviii] for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head "Income from house property" [or which would, if it had not been used for the assessee's own residence, have been chargeable to tax under that head], where such payments are made towards or by way of—

a..
b..
[c] repayment of the amount borrowed by the assessee from—
[1] the Central Government or any State Government, or
[2] any bank, including a co-operative bank, or
[3] the Life Insurance Corporation, or
[4] the National Housing Bank, or
......

Here it simply says for the purpose of HP, repayment of amount borrowed by assesse from any bank.. Will personal loan qualifies here..? Or is this the same as 80EEA

Provided the loan is for purchase or construction of house property.

Are u saying yes..? Personal loan principal is eligible if used for HP..?

If the loan is for purchase or construction of house property. In the original post the personal loan is taken for reconstruction, which is not covered in 80C.

Yes good point. I will tell u further details for better discussion.

Sale agreement was done for 20 lacs with Seller of HP on 10.01.2020. On the same day, a work order was placed on another contractor for 15 lacs (order was registered and stamp duty paid). Work order was mainly placed for interior works, Electrification, plumbing Stuff etc etc. All these things were done by Feb 2020 ending and he gave us invoice cum receipt for the same on 26th Feb 2020. Sale deed was executed for 20 lacs on 04.03.2020. But in that sale deed, nothing is mentioned about Work order.. HP was occupied on 15.03.2020.

Now tell me whether that remodelling or work order stuff comes as reconstruction..? Will it cover under 80C and 80EEA..?

My opinion is that this is a clear case of reconstruction, so will not be eligible both under 80C and 80EEA. Reconstruction/ remodelling  would mean where changes are made to an already existing structure which is the case here. Let me know, why you think otherwise.  

If we do those remodelling stuff after we occupied the house, then may be it's reconstruction. But everything is done before occupying the house and before execution of sale deed. So I thought it's construction Along with purchase