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Deduction of principal repayment

Dipesh Jha (PRACTICE ) (673 Points)

28 July 2019

sir my client has constructed a house but the construction will take 1.5 more year..He took a loan of Rs. 20 Lac and his EMI started from 18-19....while filling ITR of A.Y.19-20 whether he can claim principal amount?? or he have to wait for Construction completed..becoz section 80C is silent....plz suggest

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CA SAGAR M. AHUJA (CA) (816 Points)
Replied 28 July 2019

In Section 80C clause (xviii) the word used is purchase or Construction hence you can claim principal amount in 80C.

for your reference bare section as follows....

(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) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

(b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

(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

(5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) of section 36, or

(6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

(7) the assessee's employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

(8) the assessee's employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society; or

Dipesh Jha (PRACTICE ) (673 Points)
Replied 28 July 2019

i know i can claim principle bt when?? My client has paid in current year bt construction will completed in A.Y.21-22...

CA SAGAR M. AHUJA (CA) (816 Points)
Replied 28 July 2019

You can claim in Current Year 80C the Principal Amount, as in case of Principal Repayment the Completion Certificate condition is not required.

Suresh Thiyagarajan (Student) (3986 Points)
Replied 28 July 2019

1. As per sec 80C(2)(xviii) it should have been for the purpose of construction or purchase of a residential property. There is no other condition attached in relation to claiming of principal portion u/s 80C.
2. Hence, in the above case, the principal portion paid during the year will be allowed as deductions.
Please correct me if the above solution has an alternative view.