Pre-emi interest
viswanath
(Querist) 24 December 2011
This query is : Resolved
I have gone through the replies given earlier by panelists on pre-emi interest. However, I have a specific query. I have taken a housing loan during June 2010 and I have paid pre-emi interest from June 2010 to Nov.2011 and since Dec.2011 I am paying regular EMI as the construction has been completed and handed over. My understanding on reading the Act is that the pre-emi interest for the period from June 2010 to March 2011 is to be aggregated and claimed as deduction over a period 5 years, commencing from the year 2011-12(AY 2012-13) The pre-emi interest for the period from April 2011 to Nov 2011 and the regular EMI interest for the period from Dec.2011 to March 2012 to be aggregated and to be deducted from the total income for the year 2011-12. The explanation given in section 24 clearly states that Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the PREVIOUS YEAR in which the property has been acquired .......... shall be
deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years:
- In my case - the year prior to the 'Previous Year' is 2010-11 and hence any pre-emi interest paid during the year 2010-11(i.e., upto March 2011) will have to be claimed as deduction over a period of 5 years.
The reason for posting this query is - the IT website contains a publication"tax payers information book" where in (in page no.12) it has been mentioned that interest paid/payable before the final completion of constuction will be aggregated and allowed over a period of 5 years.
Members may peruse the above and may offer their views.
soumitra basu
(Expert) 25 December 2011
You view is partially correct. If the EMI starts after the acquisition of the property then then pre_EMI interest shall be agreegated and shall be claimed in 5 annual instalments.
