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Kuldeep Gauniyal (Sr Manager - Legal)     10 May 2013

Exemption on housing loan intererst

Can a person avail Income Tax exemption on Housing Loan interest for the property purchased in different city of same state, possession of which has not been delivered so far.   Currently, the person is  liviging in a rented property and claiming HRA.  Current residence and office are also in different cities of the same state. 


 11 Replies

Rajendra K Goyal (Advocate)     10 May 2013

Not allowed under Sec 24(b) IT Act.

Kuldeep Gauniyal (Sr Manager - Legal)     10 May 2013

Thanks for your reply Mr. Goyal.  

I think both benefits are independent of each other and there is no restriction in claiming HRA exemption and House loan interest.  Section 24(b) is silent on the matter. 

Accordingly, to my opinion, one can avail both the benefits.  

Prasun Chandra Das (Banker)     10 May 2013

Why did you ask if you had made up your opinion?


Adv Goyal is right, though he did not elaborate. The reason interest exemption cannot be claimed is not because HRA is being received, but because it is an under construction property.


You are right in saying that the two benefits are independent of each other. One can continue getting HRA regardless of residing in his own house or on rent. If one is residing in his own house & not paying rent, he cannot claim HRA exemption benefit.

Vineet (Director)     11 May 2013

Do agree with Mr Das. Forum should not be used to impose one's opinion or get secondment.


deduction for housing loan interest is available in respect of property which is complete and capable of earning income.

Kuldeep Gauniyal (Sr Manager - Legal)     13 May 2013

This was my understanding only and I also respect views of all learned fellow members.  I shall be grateful if somebody  could share the provisions where the Act restricts  "under construction property",  "Complete and capable of earning income" from claiming the exemption u/s 24(b). 

The assessee has already started paying the EMIs and possession of the property would be delivered within next six months.   The Certificate issued by the Bank states as under"


"Interest payable for the pre-acquisition or pre-construction period can also be claimed as deduction in five

equal instalments beginning with the year the house property is purchased or constructed in accordance with

and subject to fulfillment of conditions prescribed in section 24(b) of the Income-tax Act, 1961."

Prasun Chandra Das (Banker)     13 May 2013

You may Google search on the matter. For ready reference, click on

If you are still not convinced, I am sure you have a few CAs as your friends. Go ahead & ask them.


Kuldeep Gauniyal (Sr Manager - Legal)     14 May 2013

Thanks, on careful perusal of section 24(b) and Sec 23(2), I am convinced now that till the time actual acqusition of the property, exemption is not allowed.

Thanks to all for their valuable comments. 

M K SAMASRAJ (ADVOCATE)     20 May 2013

in fact, pre-construction period interest is also exempt to the extent of such interest shall be devided into five subsequent installment before claiming under construction interest i.e. also called pre-EMI interest under section 24(b) of income tax act 1961.

Kuldeep Gauniyal (Sr Manager - Legal)     20 May 2013

You are right with little correction 'pre-construction interest' and 'pre-EMI' are two different things. In the current case, EMI has already started and flat is under construction.


What is going to be done with the house proposed to be purchsed- will it be let out, or will it be under own occupation?



Kuldeep Gauniyal (Sr Manager - Legal)     20 May 2013

Will be used as self-occupied house after possession. 

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