cpc

relief under section 24(b) of it act


i have booked a flat in noida and have taken a home loan from HDFC w.e.f the current financial year i.e 2011-12. i have taken a construction linked plan and it is expected thet i will be given possession in FY 2013-14. only partial disbursement of the loan has been done in this year and i have started paying EMI to the bank. how will i claim the IT rebate benefit for the interest payment done in the year 20011-12 i.e this year under section 24(b) of IT act. i heard that i can start claiming rebate only after possession of the flat. is this true??? what if the possession is delayed and iget possession on FY 2014-15 ??? please explain me the rules regarding this aspect .

 
Reply   
 

you will get relief u/s 24(b) of i t act on the base of EMI payment since started.

 
Reply   
 


AUDITOR

Dear sir

As per Income Tax Act 1961 in the heads income from house property Sec 24(b), you can claim deduction after completion of construction. total interest ( From loan taken or construction starting Which ever is earlier  Till the year of  completion of construction) . You can claim deduction 1/5  every year till its over including with intrest after completion of construction..


Total likes : 1 times

 
Reply   
 

please clarify your remarks that "You can claim deduction 1/5  every year till its over including with intrest after completion of construction..". i am still not clear

 
Reply   
 
proprietor

I am reproducing the revant part of Sec. 24(b)Explanation:

''Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such borrowed capital for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof as`allowed as deduction under any provisions of the act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years.''

Hope it's clear.


Total likes : 1 times

 
Reply   
 
AUDITOR

 

 

Benefit under section 80C for principal deduction of the housing loan EMI is not allowed if the home loan borrowing is for the purpose of reconstruction/renewal/repair of house property. Tax benefit under section 80C is allowed only for acquiring or constructing a new home and is not for alteration of an existing house.

        
In contrast, deduction for Interest is allowed under section 24(b) even for the loan taken for the purpose of reconstruction/renewal/repair of existing house property but subject to the limit of Rs 30,000 in case of self-occupied house property. In case of let out house property, actual interest is allowed without any ceiling.

        
In your case, we are assuming that your house is self occupied. You can continue to claim Deduction under section 80 (c) for your previous loan in 1999 for purchase of house property but not loan for renewal of house which you have taken in 2008. Further, Interest deduction u/s 24 (b) can be claimed for both loans subject to the above limits.


Total likes : 1 times

 
Reply   
 

what does this clause of section 24(b) implies in my case

"Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such borrowed capital for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof as`allowed as deduction under any provisions of the act,shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years.''

 
Reply   
 
associate consultant

Section 24(b) of the Act uses the word construction.

Now in your case I assume the work of construction itself has not been completed. So, I will that you will be eligible for deduction of 150000 (again assuming it to be self occupied within the meaning of section 23(2) of the Act only after completion. Total interest uptill that period will be availed from the year of completion of construction and four succeding PY's (1/5 each year- preconstruction interest).

In case if construction has been completed and full amount of payment has been done, only possession is not given due to some legal issues, substance over form, i can suggest to take the interest deduction in the same year itself.

 
Reply   
 
ADVOCATE

 

Repayment of the principal portion of the loan, is claimed for deduction under Section 80C, whereas the interest portion is claimed under S.24(b). The relevant prtion of S 80C provides as under:

Section 80C(2) (xviii): for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head "Income from house property" (or which would, if it had not been used for the assessee's own residence, have been chargeable to tax under that head), where such payments are made towards or by way of—

(a)  - not applicable in your case -  

(b)  -not applicable in your case- 

(c)  repayment of the amount borrowed by the assessee from—

----- - - - - - - - - -

(5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) ofsection 36, or

(6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

---- - - - - - - - -  - -  - - - -  - - 

 

(d)  stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee,

but shall not include any payment towards or by way of—

(A)  - not applicable in your case --   or

(B)  the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or

(C)  any expenditure in respect of which deduction is allowable under the provisions of section 24;

From the above, it appears that the EMI Payments you paid will not qualify for any deduction in the  Assessment Year 2012-13, relevant for the FY 2011-12.

 
Reply   
 

but if registration & stamp duty is done for the underconstruction flat than i think person can claim interest component, not principle.

Please read below matter: Please suggest,

There are no changes proposed in respect of deduction available towards principal repayment & interest payment u/s 24(b) or U/s 80C of the Income Tax Act-1961. For the mass benefit the principal amount of House Loan Repayment & interest thereon as under:

Interest payable on Home loan:
  • U/s 24(b) of the Income Tax Act-1961, deduction up to Rs. 150,000/- is admissible against the interest payable on the loan availed for purchase / construction of the self occupied house property.[However, the acquisition or construction of the house property should be completed within 3 years from the end of financial year in which home loan was taken; otherwise, the deduction would be restricted to Rs. 30,000/-]
  • In respect of loan taken prior to 01.04.1999, the deduction can’t exceed Rs. 30,000/-.
 
Reply   
 

LEAVE A REPLY


    

Your are not logged in . Please login to post replies

Click here to Login / Register  



 

  Search Forum








×

Menu

IPC Grand Course     |    x