I want to take home loan from bank but one of my friend offered me the same amount at a lower interest rate(around 7%) than what the bank will give.I know I don't eligible to claim deduction under section 80C in principle amount part and also the floating interest rate benefits.Apart from this, is there any other disadvantages that I might get when compared to taking home loan from bank?
5 Replies
Khush Trivedi
(4151 Points)
Replied 14 June 2024
Yes
Under section section 80C you won't get Deduction if it will be borrowed from your friend as 80C only allows Deduction where the payment made to
(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
&
Also you will not get the benefits of Interest paid on housing loan under section 24(b) ( upto 2 Lakhs in case of self occupied property)
Under section section 80C you won't get Deduction if it will be borrowed from your friend as 80C only allows Deduction where the payment made to
(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
&
Also you will not get the benefits of Interest paid on housing loan under section 24(b) ( upto 2 Lakhs in case of self occupied property)
Venkata Suresh
(28 Points)
Replied 14 June 2024
@ CA Anoop Kumar Sharma.Please find the attached screenshot.Please let me know the correct information.
Attached File : 1891213 20240614094918 img 20240614 094819.jpg downloaded: 148 times
Khush Trivedi
(4151 Points)
Replied 14 June 2024
Dear sir as under section 24(b) there is no mentioning about specified banks but however following lines you will find as
No deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.
So if you are taking loan from your friend you might claim the interest deduction under 24b after furnishing interest certificate but you won't get benifits of section 80C( as mentioned above) so kindly compare both situations where you are getting benifits & select appropriate option to avoide legal consequences
No deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.
So if you are taking loan from your friend you might claim the interest deduction under 24b after furnishing interest certificate but you won't get benifits of section 80C( as mentioned above) so kindly compare both situations where you are getting benifits & select appropriate option to avoide legal consequences
Venkata Suresh
(28 Points)
Replied 14 June 2024
I know,I'm not eligible to claim section 80C but I didn't have clarity about section 24..wheather to claim or not.
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