Procedure for tax exemption on interest under s/24

Tax queries 349 views 2 replies

Vaibhav

Others

24 Points Posted on 22 March 2014

Hi everyone,,

I had taken a loan of 4 Lacs from my mother (through cheque) for purchasing a home in April-2013.. I have got the Occupancy Certificate for the house.. I have already claimed for the interest/principal exemptions based on the bank's loan statement.

I also want to claim the exemption on the interest, for the loan amount received for my mother.. I need help in understanding what legal documents are required to prove IT dept., that I have taken loan from my mother.. Please let me know the details, if any document needs to be prepared for this..

Regarding the payment of the loan amount, should I follow the plan, same as that with the bank (like treating fixed EMIs and calculating the total interest based on tenure/interest rate) or can I pay any lumpsum amount and treat a part of it as interest... This may look a bit naive, but please enlighten me.. )

Thanks a lot - Vaibhav

Replies (2)

Gautam Bothra

40 Points Posted on 22 March 2014

There is nothing in law that prevents deduction of loans taken from a family member for purpose of deduction of interest u/s 24. However it is necessary to obtain a certificate from the person whom interest is payable specifying the amount and a statement that the loan has been provided for acquisition of house property. If you meet these requirements, it should be sufficient.

Income Tax Wala: (Fin. Expert)

Chartered Accountants

2015 Points Posted on 23 March 2014

Dear Amit

Mr. Bothra is absolutely right but i would like to add one thing that rate of interest on loan taken from your mother should not be more than normal rate of interst prevailing in market. means it should not be somewhere around 10-12% p.a.