SEC 24 OF THE INCOME TAX ACT

Amir (Learner) (4016 Points)
Replied 16 February 2010

Dear Karthikeyan,

We have discussed this thing many a times........that Under Sec 24 deduction of interest is allowed even if amount is borowed from Friends & relatives....No doubt about it...

But it is advisable to take a loan from bank., employer, etc so that repayment of principal can also be claimed as deduction u/s 80 C, because it is a specific mandate of 80C that Loan should be borrowed from Bank, employer, etc..

So in the present case YES deduction of interest will be allowed on loab borrowed from FATHER

1 Like

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 16 February 2010

Dear Kartikeyan & Aamir,

The question and it's answer published in today's Ecomomic Times are not clear in itself. The person in question is living on rental basis and has taken loan from his father. Is that person owner of some immovable house property or not? If he is not owner then there is no question of deduction of interest u/s-24.

1 Like

C.Balaji (Learner) (1867 Points)
Replied 17 February 2010

agree with CA. Satendar kumar...

In the question there is no relevance for section 24....

The individual is living in a rented house and wants to claim the loan repaid???

loan taken for what purpose ????

If the loan is taken for pur or const a house i.e. let out since he is staying in a rented house...

he can claim ded u/s 24B for interest on loan.....

1 Like

karthikeyan.v (Chartered Accountant) (523 Points)
Replied 17 February 2010

Dear Sir,

I totally agree withwhat you have said, when a person has no income from house property, the question of using sec 24 does not arise, is it not, I feel the reply given in ET- was right, that is the reason I brought it for discussion so that, if I am wrong, I could correct my self, I think Mr.Amir did not understand my question and has generally said that interest payable to relatives are also deductable U/s 24.

many thanks for your response,

regards

karthi

Originally posted by : CA.Satendar Kumar
	Dear Kartikeyan & Aamir, The question and it's answer published in today's Ecomomic Times are not clear in itself. The person in question is living on rental basis and has taken loan from his father. Is that person owner of some immovable house property or not? If he is not owner then there is no question of deduction of interest u/s-24.

Amir (Learner) (4016 Points)
Replied 17 February 2010

Dear Karthikeyan,

Deduction of Interest can also be claimed in respect of a Self Occupied Property, Now in this case there won't be any Rental Income...

Specific limits are there Rs. 1,50,000 & Rs. 30,000/-

Plz reply if u meant something else..............

karthikeyan.v (Chartered Accountant) (523 Points)
Replied 17 February 2010

Dear amir,

the question that was published in THE ECONOMIC TIMES yesterday was a person who is living on a rental basis, has taken some loan from his father, it is not specified that he has taken a loan for construction or for repairs ect.. he has simply taken a loan, the question is ofcourse not clear, as rightly pointed by CA. Mr. Satendar, and the answer given is evenmore vague.

I totally agree with you that any interest paid on loan taken even from relatives can be claimed under sec 24, but it should be for the construction, repair, or for repaying a loan taken for the purpose of construction , am I right sir, this was my question,

i hope i am clear

regards

karthi

Originally posted by : Amir

Dear Karthikeyan,

Deduction of Interest can also be claimed in respect of a Self Occupied Property, Now in this case there won't be any Rental Income...

Specific limits are there Rs. 1,50,000 & Rs. 30,000/-

Plz reply if u meant something else..............

Nithin Chettoor (Assistant Manager) (388 Points)
Replied 17 February 2010

Dear guys,

continuing from where the query has reached, its clear tht in the qstn, the purpose of loan is not given. Also, its not mentioned in the question tht is there any interest paid actually. From the nature of it, its from Father and there are a higher chanvce for the loan being an interst free loan.

So we need to assume sumthing. I am assuming the loan is interest bearing. and also, it may be possible that he is currently living in a rented place and the loan amount may be used for the construction of a house. So, as currently there is no income under the House Property head, he can cliam the interest paid during these periods upto the date of construction as pre construciton period interest. I hope my guess has some sense.

Jatin Singh Negi (Country Analyst ) (505 Points)
Replied 17 February 2010

Since in question the author has mentioned both the words rent and loan so it is presumed by the expert that the loan has been taken for housing purpose only and thereby he has said yes for the deduction for its interest.

karthikeyan.v (Chartered Accountant) (523 Points)
Replied 17 February 2010

hi nithin,

I liked the way u answered

regards

karthi

Originally posted by : Nithin S

Dear guys,

continuing from where the query has reached, its clear tht in the qstn, the purpose of loan is not given. Also, its not mentioned in the question tht is there any interest paid actually. From the nature of it, its from Father and there are a higher chanvce for the loan being an interst free loan.

So we need to assume sumthing. I am assuming the loan is interest bearing. and also, it may be possible that he is currently living in a rented place and the loan amount may be used for the construction of a house. So, as currently there is no income under the House Property head, he can cliam the interest paid during these periods upto the date of construction as pre construciton period interest. I hope my guess has some sense.

Yeshwanth (Chartered Accountant) (145 Points)
Replied 17 February 2010

How can you claim deduction u/s 24 for the rented house you are living in?.....

manish (Article Assitant) (358 Points)
Replied 17 February 2010

Yes, U can claim the deduction of interest and principle amount.

but u should inform the above fact to the commissioner of IT in writting. that you are taking a loan from your father and the rate of interest.

regards

manish

kushal (of) (37 Points)
Replied 17 February 2010

The question of deduction u/s 24 a&b arises only when

A) a person owns house property

AND

B) loan has been taken for reconstruction or renuel f such property

the fact of the case does not clearly indicate that whether the person is owning property or not .

so it definately very simple that if that person is owner, then he surely can claim deduction.

BUT if he is not owing property then , i afraied hat he won't be able to claom deduction.

let me tell you one related deduction which a person can claim if he is NOT OWING property,

he can claim deduction u/s 80GG for rent paid by him under IT Act.

Rushabh Vyas (Articled Assistant) (33 Points)
Replied 19 February 2010

Just take the deduction..there is no doubt at all..If the property is registered in the name of the person who is taking the loan from father then he can obviously take the deduction for both principal and interest. And what if he is staying in a rented house? what difference does it make..does sec.24 says that the person has to LIVE in that house..?? no...if i m purchasing a flat for an investment purpose then too i would get the deduction. So simple...