• Income tax rebate on housing loan

I had purchased flat under construction in 2018. I have been given possession of flat on 15 Jan, 2020 by the builder. For purchase of flat i took loan from HDFC and following interest certificates are issued
FY 2018-19
Pre EMI Interest Rs 183163
Fy 2019-20
Principal 21940.00
Interest 58254.00 
Pre EMI Interest Rs 297003.00 
I started my EMI after taking possession on 15 January, 2020
What interest rebate i am allowed for loan taken for house in the current year FY( 2019-20). There is a doubt if PRE EMI interest of current year ( 2019-20, ie year in which i had taken possession) is allowed for full amount 2,97,003.00 (PRE EMI INterest) or not subject to limit of Rs 2,00,000.

Please clarify
Asked 4 years ago in Income Tax

Dear Sir,

 

Hope you are doing well !!

 

Deduction on home loan interest cannot be claimed when the house is under construction. This pre-construction interest can be claimed only after the construction is finished.

 

The interest for the period during which the house was under construction can be availed in five equal instalments after the construction is completed.

 

However, the maximum eligibility remains capped at Rs 2 lakh.

 

Simply,The interest paid can be claimed in equal parts in five financial years post completion or handing over of property within the overall annual limit of Rs. 2 lakh.

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Hello,

 

The interest paid until 31 March immediately preceding the year of completion of construction of the house is called the Pre-Construction Period Interest. In your case, since the construction is complete in F.Y. 2019-20, interest paid up to 31st March 2019 ( Rs. 1,83,163) would be regarded as Pre-Construction Period Interest, which would be allowed as a deduction in 5 equal installments from F.Y. 2019-20. 

The interest paid in current F.Y. 2019-20, would be regarded as normal interest u/s. 24(b).

In the case of Self Occupied Property, the maximum deduction for interest (including pre-construction interest) would be Rs. 2,00,000. in your case also, the max. deduction for interest u/s. 24 would be Rs, 2,00,000.

I hope that this answer satisfies your requirements.

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Madhya Pradesh
2608 Answers
16 Consultations

5.0 on 5.0

In case of self occupied property interest would be restricted to Rs. 2 lakh whether its Pre EMI interest or any other interest.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

Yes it will be allowed subject to 2 lakh

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

Yes, it will be allowed fully subject to capping of Rs 2 lakhs in current fy 2019-20.

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

It would be allowed up to the limit of Rs. 2,00,000 only.

Hunny Badlani
CA, Madhya Pradesh
2608 Answers
16 Consultations

5.0 on 5.0

Hello Sir,

 

It will be allowed up to the limit of Rs. 2,00,000 only including Pre EMI interest as well as current year interest.

 

 

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

Hi

 

Interest paid before FY 19-20 shall be pre construction interest and allowable as 5 equal installments starting from FY 19-20.

 

If your house property is self occupied, all interests including pre EMI interest shall be capped at 2 lacs for deduction under section 24.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

However, if it's a let out property, you can claim all interests including pre EMI interest without any limit. But, max loss under house property head that could be used for set off with income under other heads shall be 2 lacs. Remaining loss, if any, shall be carried forward.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

Hii

Interest allowed subject to capping of Rs 2 lakhs 

can you share loan amount and Properrty value 

for considering other deductions on interest 

Lalit Bansal
CA, Delhi
773 Answers
61 Consultations

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