Financial Daily from THE HINDU group of publications
Sunday, Nov 20, 2005
Financial Daily from THE HINDU group of publications Sunday, Nov 20, 2005 |
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Investment World
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Income Tax Columns - Tax Talk Options for the borrower T. Banusekar
I BOOKED a flat for Rs 28 lakh. I have taken a bank loan of Rs 24 lakh for buying the flat. The bank has started disbursing the loan in parts to the builder. The construction of the building started in June 2005. The flat will be ready for possession only in December 2006. The banker has given me two options — I can either pay only the interest during the period until possession is given or pay both the principal and interest even during this period. I have opted to pay the principal and interest during the period up to December 2006. Will the amount paid up to this period qualify for deduction under Sections 24 and 80C? Amit K. Arora Reply As for the principal repayment, you can claim the deduction in the year in which the principal is repaid. Section 80C allows deduction in respect of any amount paid in the previous year and, therefore, the principal repaid during the construction period can be claimed even in the same year. The interest paid from April 1, 2006, will qualify for deduction in full in the financial year 2006-07 (assessment year 2007-08). The interest up to the period ended March 31, 2006, can be claimed in five equal annual instalments beginning from the financial year 2006-07, the year in which the construction will be complete.
Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.
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