Personal Finance

Tax Talk

SANJIV CHAUDHARY | Updated on December 29, 2012 Published on December 29, 2012

Deduction for interest paid on home loan can be claimed under the head ‘Income from house property’ once construction is complete and possession is given.

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My son has paid stamp duty and registration charges in FY 2012-13 for an under-construction flat. The possession is expected in January 2015. Bank loan has been released partly and the EMIs have already begun. Can he avail the benefit of repayment of loan under Section 80c in FY 2012-13?



What about the interest portion?



We need to plan for investment in other avenues, in case he is not eligible under Section 80c.



— R. Rajan



Deduction for Principal part of EMI is allowable under the Income-tax Act, 1961, when construction has been completed. Deduction is allowed for any repayment of the amount borrowed by the assessee for purchase or construction of a residential house property, the income from which is chargeable to tax under the head ‘Income from house property’ which is only when the construction is completed and possession is handed over.



Similarly, deduction for interest paid on home loan can be claimed under the head ‘Income from house property’ once construction is complete and possession is given. Pre-construction interest can be claimed in 5 equal instalments starting from the year in which construction has been completed.



Your son can start claiming deduction for interest and principal paid only once the construction has been completed and possession is handed over to him. Hence, he may plan for other investment options i.e. purchase of National Savings Certificates, life insurance policies, fixed deposit with a lock-in period of five years for which deduction u/s 80C is available.



Kindly clarify whether Rs 20,000 under Section 80ccf is allowed for this year also i.e. AY 2013-2014 in addition to Rs 1 lakh under 80 C.



—R. Ayyanmani



Deduction of Rs 20,000, for investment in notified long-term infrastructure bonds, under Section 80CCF of the Income-tax Act, 1961, was applicable only for AY 2011-12 and AY 2012-2013. The same has not been extended by Finance Act, 2012. Hence, you cannot claim any deduction under this section in the current financial year relevant to AY 2013-14.



Mail your queries to >taxtalk@thehindu.co.in





(The author is a practising chartered accountant)

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Published on December 29, 2012
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