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There seems to be an inconsistency in the income-tax law on housing loans. While interest paid to a lender in the unorganised sector is deductible from rent, the repayment of principal to the same person does not qualify for deduction under Section 80C. Why is this so?

The apparent reason is Section 80C confers a benefit while deduction of interest is necessary to compute income from house property. Hence the law can afford to be strict on the quality and calibre of the lender for the purpose of allowing deduction of the principal. In a way this is a good measure, the one that should impel one to resort to organised sources alone.

S. MURLIDHARAN

More Stories on : Income Tax | Real Estate & Construction | For the Asking

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