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Deduction under section 24

VIJAY KHANDELWAL (Articleship Trainee) (52 Points)

28 December 2016

hello all,

i have one query, that one of my client booked a flat in 2011, and he took the loan in 2011 to make the payment to builder.. later possession was given in 2016..

please clarity in this Situation that what will be the deduction u/s 24.. (a) pre construction period interest i.e. from 2011 to 2016 will be allowed?
(b) what amount of post construction period interest from 2016 will be allow?

thanks & regards.

Vijay Khandelwal

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9 Replies

Mukesh Kumar (Accounts Manager) (1466 Points)
Replied 28 December 2016

Interest deduction u/s 24b is allowable in 5 equal installment beginning from the year of completion of house property construction

VIJAY KHANDELWAL (Articleship Trainee) (52 Points)
Replied 28 December 2016

@ tanush sir..

thanks for replying.. actually construction period is more than 3 years... and as per condition in section 24, for claiming deduction construction must be completed within 3 years....

so my question is that pre construction and post construction period interest will be allowable

Mukesh Kumar (Accounts Manager) (1466 Points)
Replied 28 December 2016

24 B DEDUCTION IS NOT ALLOW FOR REPAIR , RECONSTRUCTION , PRE CONSTRUCTION , RENEWAL , MAINTAINANCE,

CA VIRAL SANGHVI (Finance head) (681 Points)
Replied 28 December 2016

Money may be borrowed prior to the acquisition or construction of the property. In such a case, interest paid/

payable before the final completion of construction or acquisition of the property will be aggregated and allowed for five successive financial years starting with the year in which the acquisition or construction is completed. This deduction is not allowed if the loan is utilized for repairs, renewal or reconstruction.

In your case the pre construction period interest is allowed after 2016. as The period from borrowing money until the construction of the house is called pre-construction period. Pre-construction interest deduction is allowed for interestpayments made from the date of borrowing till March 31st before the financial year in which the construction is completed.

and post construction period interest is allowable as interest over and above the pre consturction period interest.

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VIJAY KHANDELWAL (Articleship Trainee) (52 Points)
Replied 28 December 2016

@ CA viral sanghvi

thanks for reply..
actually construction period is more than 3 years... and as per condition in section 24, for claiming deduction construction must be completed within 3 years....

so my question is that pre construction and post construction period interest (both or only post construction) will be allowable

CA VIRAL SANGHVI (Finance head) (681 Points)
Replied 28 December 2016

Hi,

I think this would be helpful

The time limit for completion of construction has been extended to 5 years starting from 1st April 2016.

Note that interest deduction can be claimed starting the financial year in which construction of the property is complete.

VIJAY KHANDELWAL (Articleship Trainee) (52 Points)
Replied 28 December 2016

@ CA Viral Sanghvi

thanks for quickly reply...

sir, thanks a lot for solving my query.. please u can do me a favor if u can provide me the amendment notification or circular, because on income tax website it is still showing 3 years..