poly ghosh 22 December 2021
G.L.N. Prasad (Retired employee.) 22 December 2021
Mr. Poly Ghosh,
The purpose of the exemption is to encourage individuals in having a residence of their own and not to encourage real estate/commercial activity. Contact a local Chartered Accountant or
Knock the doors of CPIO, Income tax through online RTI Application with Rs.10/- as RTI Fee. You can seek information as follows.
Subject on which information is sought: Applicant wants to purchase two residential flats in different cities, but in the same district, by taking bank loan at different times during yr 2022. and he is already having only one inherited ancestral house in that district.
Information solicited: Please provide me the specific exemption clause in Income Tax that through which applicant can avail the benefit of tax deduction from both bank loan interest to be recovered during the yr. (restricted 2L u/s.24 max.)
Dr J C Vashista (Advocate) 23 December 2021
Consult a local chartered accountant as this is not a legal query / dispute for consideration and obligation of legal experts on this platform.
Kawmini Liyanage 23 December 2021
One can avail tax benefits from their personal loan if they have used the personal loan money for the purchase or construction of a residential property. The borrower can avail tax benefits for repayment of interest for the same under Section 24 of the Income Tax Act, 1961. An important section concerning home loans is Section 24, which allows you to claim exemptions on the interest you pay on home loans. Another section that allows you to claim tax benefits on the repayment of the principal amount is Section 80c.
Tax Deductions under Section 24 of the Income Tax Act:
To avail this deduction, you need to compute the interest amount you have to pay to the bank or financial institution that you took the loan from, separate from the principal repayment. It does not matter whether you have actually paid the amount to the financier – you can get exemption for the complete annual interest amount.
Exceptions under Section 24
Computation of Income from House Property
Understanding income from house property can be tricky. To make it simple, here are a few things to keep in mind:
Section 80ee allows an additional exemption of Rs. 50,000 if the cost of the house is less than Rs. 50 lakh and the loan taken is less than Rs. 35 lakh. This provision is available only from the financial year 2020-21. An interest point to note is that these tax exemptions are available only to the person in whose name the house and the loans are. If the person dies and the property and loan liabilities are passed on to the heir, the inheritor cannot claim any tax benefits. However, if you have taken a joint loan or own a property jointly with another person, all the parties who are repaying the loan and own the property can claim individual deductions, because Section 24 applies to each individual and not each property.
The maximum amount that can be deducted as tax deductions, in this case, is Rs.2,00,000 for a house occupied by the borrower. There is no cap on the maximum amount that can be claimed if the house has been rented out to someone else. It is important that the borrower be the owner of the property in order to avail of tax benefits.