INDEXING COST OF IMPROVEMENTS

Mr. A has a housing loan of Rs. 30,00,000.00 for which he is paying interest Rs.2,50,000.00. He is debiting that interest in house property account and also claiming dedction of Rs.1,50,000.00 u/s 24. My querry is while selling the property, the interest debited in property account will get indexation, and is it amount to cost of improvement ?

Replies (8)
Originally posted by :Murali
" Mr. A has a housing loan of Rs. 30,00,000.00 for which he is paying interest Rs.2,50,000.00. He is debiting that interest in house property account and also claiming dedction of Rs.1,50,000.00 u/s 24. My querry is while selling the property, the interest debited in property account will get indexation, and is it amount to cost of improvement ? "


 

INTEREST IS A REVENUE EXPENSE. IT CANNOT BE CAPITALISED. IT CANNOT BE DEBITED TO THE PROPERY ACCOUNT. ANNUAL INTEREST IS CHARGED TO REVENUE ACCOUNT. THERE IS NO QUESTION OF INDEXATION.

YEs It is revenue expense if you take benfite of sec 24 then u also take benefit as cost of improvment  this ia not valid planning my dear

yes

it is revenue expenditure. hence cant take that benefit this may be called duoble deduction

 

There is a similar propeblem discussed in Taxmann's Direct Taxes Law & Practice, under "Propblems on Computation of Capital Gains, So it seems clear that the indexation is possible, I want to know interest u/s 24 is possible or not, because the limit u/s 24 is Rs.1,50,000.00only

yes dear it is very much possible to claim deduction of Rs. 150000 u/s 24 as there is no pre condition regarding the claim of indexation,nd also u can claim the indexation benefits on the same as there is no pre condition of claiming of deduction u/s24.(It is only possible when it is of the nature of capital i.e. intt. of pre-construction period.

You cannot debit interest to property account as it is a revenue expenditure... So there is no question of indexation on it.......You can claim deduction upto Rs. 150000 u/s 24...

Indexation on  Interest debited to property account cannot be claimed as it does not amount to improvement

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