Income tax rebate on home loan

Querist : Anonymous (Querist) 09 May 2011 This query is : Resolved
Dear sir/ madam

I have purchased a property in 2010 and is under construction the property is alloted to me but the possession is still to be done. I have borrowed loan from a bank to purchase the property now i am repaying it from my salary.

Please advise if i can claim the deduction under 80C for the said repayment of loan and what all components can be taken into computation

Your early revert on this will be highly appreciated.

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Guest (Expert) 09 May 2011
You can avail rebate in Income Tax on account of repayment of principal amount through installments, as well as interest charged by the financial institution. Rebate on the element of interest is limited up to Rs. 1,50,000/- only in any financial year.

R.Ramachandran (Expert) 09 May 2011
The rebate from income tax towards interest paid on borrowed capital would be allowable only if the residential property has been acquired or constructed. Therefore, until the construction is completed the interest paid on borrowed capital shall not be allowed as a deduction.

Querist : Anonymous (Querist) 09 May 2011
Mr. Ramachandran

Thanks for the update it means i can avail rebate only on the interest paid and not on the principal amount in any financial year till the possession.
Also request you if you can provide some link to this as it will be helpful for many of my colleagues in office.

Regards,

R.Ramachandran (Expert) 09 May 2011
You have not understood my reply properly.

I had answered your question as under:

"The rebate from income tax towards interest paid on borrowed capital would be allowable only if the residential property has been acquired or constructed. Therefore, until the construction is completed the interest paid on borrowed capital shall not be allowed as a deduction."

Therefore, how can you say that "i can avail rebate only on the interest paid and not on the principal amount in any financial year till the possession."

Rather, I had said that unless you get the possession (i.e. the building acquired or constructed - and not building under construction), you cannot avail the benefit of rebate towards interest paid on the housing loan.

RAJU O.F., (Expert) 09 May 2011
You can claim rebate from Income Tax only if the loan was availed of,from a bank or FI, as a Housing Loan.

Querist : Anonymous (Querist) 10 May 2011
Sir can you share the Section under which this is covered

R.Ramachandran (Expert) 10 May 2011
To whom is this question specifically addressed?

Querist : Anonymous (Querist) 10 May 2011
To you only sir
I am obliged by your detailed reply. I shared with my accounts department and they requested for the section so i addressed it to you