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Query u/s 80c

$ achin @grawal (ahmedabad) (39 Points)

28 October 2013

will repayment of housing loan principal amount qualify for section 80c deduction if new loan is taken from same bank in order to avoid higher interest rates of previos loan. if it qualifies for deduction u/s 80c then will repayment of principal of such newly taken loan qualify for deduction u/s 80c in future years? pls gve reference of relevant case laws.

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6 Replies

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 28 October 2013

Yes, the same will be the case of refinancing, so definitely deduction u/s 80C......

Mihir (Wealth Manager) (5293 Points)
Replied 28 October 2013

Yes, it is allowed but not penalty.

@VaibhavJ (Believe!! Live your dreams!) (33511 Points)
Replied 28 October 2013

For repayment of HL thru loan porting no deduction u/s 80C is allowed.

Since 80 C requires that amount invested should be from earned Income.

However you can claim exemption from new loan.

Thanks//VaibhavJ

Nikhil Kaushik (Fellow CA) (85304 Points)
Replied 28 October 2013

Should be allowed. As Mihir said, any penalty charged by the bank won't be allowed.

$ achin @grawal (ahmedabad) (39 Points)
Replied 28 October 2013

The thing is how can principal repayment be allowed when it is out of other borrowed loan that too of same bank? And further again deduction of principal repayment will be claimed by the assesee for such new loan. So it will amount to claiming of deduction two times. Such a practice would be a good tax evasion policy when there is no other 80c investment like lic/ppf etc. Also prepayment charges of loan has been allowed by SC as a interest u/s 24b.