Income tax on interest and home loan

Interest Received will be taxable under other sources. Tax cannot be avoided

Your interest income is taxable when accrued if you follow accrual accounting system. or else taxable when received if you follow cash basis of accounting. that is
if you follow accrual system of accounting then you should offer your interest income to tax she accrued.
if you follow cash basis then on receipt of interested you should pay tax on it.

even though you prepaid your home loan in advance maximum you claim for principle repayment on home loan is Rs. 1,50,000.

as you are saying your friend is going to pay now and amount of interest will be huge means I think you did not offer the interest income to tax in the respective years that means you should follow cash basis of accounting for that. and you will be eligible for deduction for housing loan repayment up to 1.5 lacs when you paid.

I have little doubt in my opinion let's see for others answers.

Hi

 

we have to pay tax on interest on loan received. if we make pre payment of home loan than we will get a deduction of 1.5 lac u/s 80C

 

there is no other way. 

Thanks for the responses. At the same time, this is quite disheartening. I don't have regular income, I usually fall below the minimum slab. And to part with a large portion in one year that will be worth couple of years worth of income is absolute grief. The loan I had given was my savings of over a decade.  

Can I show farm expenses? or any other expenses? can I use this to buy a new home? 

Are you getting amount through bank account??
you can't show farm expenses. even though you use the amount for new home there will be no deduction for that.

Thanks again everyone. 

Can I show expenses towards upgrading my house/building a new room? 

I am slowly losing hope : (

Originally posted by : Ramaraju G
	Are you getting amount through bank account??you can't show farm expenses. even though you use the amount for new home there will be no deduction for that.

Yes, I will be getting it through bank transfer. I had transferred from my account, and hence...

Originally posted by : Goog
	Thanks again everyone.  Can I show expenses towards upgrading my house/building a new room?  I am slowly losing hope : (

NO

Ask him to pay in cash to some extent 😉😉

I have a tricky method that might aid you in reducing tax payment.
ramaraju has discreetly said that it depends upon the method of accounting followed.
taking this point further, if we say that you are following accrual basis of accounting then the interest income was taxable in the respective years as you earned it.

for the current year only that part is taxable which is accrued in current year. in that only a small amount of interest will be added to your income for this year.

concerning preceding years' interest, it will be treated as if you havent offered it for tax eventhough you were liable to do so. the department can only reopen the cases for preveious years, which is very unlikely to happen.