Deductible Interest Expenses for Oversees loan

Tax queries 578 views 5 replies

Breaker

Manager

31 Points Posted on 03 March 2010

I have a couple of questions about what can be considered as decuctible expenses with relating to Income tax.

The scenario is

- Investment being made in a commercial property in India by an NRI.

- The capital for the purchase of the propery is coming from two sources

(i) - From mortgaging another property (in India) that belongs to the NRI

(ii) - From loans from oversees banks in the Country of Residence of the NRI

Questions:

1- Is the int paid on the mortgage in scenario (i) deductible as a valid expense?

2- Is the int paid on the loans in scenario (ii) deductible as a valid expense?

3- If the above int exps are deductible, can these losses be carried forward?

4- If the above int exps/loss can be carried forward, how long can they be c/f ?

Appreciate your time to respond to my queries.

Replies (5)

Breaker

Manager

31 Points Posted on 03 March 2010

Can some please provide some input on this.

Thanks

Amir

Learner

4016 Points Posted on 03 March 2010

Hi Friend,

For me -

Interest paid on mortagage (i) as well as on mortagae (ii) will be treated as part of "Cost of Acquisition"

This amount cannot be claimed as expenses as such.

Its only when this property will be sold the said above amount will be deducted in computing capital gains.

Breaker

Manager

31 Points Posted on 03 March 2010

Is that true? The monthly interest paid to generate capital to acquire a property not considered a deductible expense ?

Any other point of views.

nikhil.r.gondhalekar

articled assistant

64 Points Posted on 08 March 2010

If commercial property is let out then rental income would be 'Income from house property' then int will be allowed.

Breaker

Manager

31 Points Posted on 10 March 2010

Originally posted by : nikhil.r.gondhalekar
	If commercial property is let out then rental income would be 'Income from house property' then int will be allowed.

Thanks a lot for your response, is there a particular section that I can reference this or is this in some rule etc... that I can read up. Pointers are highly appreciated.