Int. on Housing Loan- AY 21-22 ( Due to COVID.... )

An assessee paid his housing Loan installments regularly.

house loan appx 40 lakhs. monthly installment 50,000 appx

His bank, *** while giving the certificate, excluding the interest amount for the period the Govt. has asked the banks, not to DEBIT/collect. (i think it is about 6 months ).

As a result, the bank gave the certificate excluding the interest for such period ( ie 6 months )

the assessee could not avail of the exemption benefit interest fully i.e instead of 2,00,000. could avail only about 50,000

As a consequence, he has to pay tax on this 1,50,000 @ 30%

Now please clarify - As the assessee paid his instalments THOUGH THE GOVERNMENT HAS EXEMPTED THE BANKS FROM CHARGING - can he claim interest benefit OR NOT ?

Great question! Here’s the clarity on claiming interest deduction on a housing loan during the COVID moratorium period:

The Interest on Housing Loan deduction under Section 24(b) (up to ₹2 lakh for a self-occupied property) is allowed only on the interest actually paid during the financial year.
During the COVID moratorium period, banks were allowed not to charge or debit interest, or the payment of interest was deferred.
So, if the bank did not charge or collect interest for those 6 months (moratorium period), that interest is not considered paid by the assessee in that financial year.
Consequently, the deduction is limited to the interest amount actually paid/ debited during the year as per the bank certificate.
Even if the assessee paid installments during moratorium, the part of installment that relates to interest not charged by the bank cannot be claimed as deduction because the interest was never due or paid.
Hence, the assessee cannot claim deduction on the 'deferred' interest amount not charged by the bank.
This has been clarified by CBDT and courts have upheld that deduction depends on actual payment.