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I have booked a flat which is under construction for Rs 80.6 lakh. I took a loan of Rs 50.5 lakh from a private bank and arranged the rest from my personal savings. The flat is expected to be handed over in November 2013. I have paid an interest of Rs 2,10,000 in FY 2011-12. However, I have not claimed I-T deductions till now. Can I claim it in FY 2012-13.
— S. Raja
Under the Income-tax Act, 1961, the annual value of the property consisting of any building or land appurtenant thereto owned by the tax payer is chargeable to tax under the head ‘Income from House Property’. An under construction flat is not chargeable to tax under this head as the same cannot be termed as ‘house property’. Therefore, no deduction of interest on loan can be claimed. However, once the construction is complete and you have obtained the possession, a deduction for the interest payable for the period prior to the financial year in which the flat has been constructed can be claimed in five equal instalments starting from the said financial year subject to fulfilment of conditions and the limits prescribed under the Act.
Hence, in your case where you will be able to take the possession in November 2013, the deduction of prior years’ interest payments shall be available in 5 equal instalments beginning FY 2013-14 subject to limits prescribed.
The tax saving FD offered by banks has the option of having joint holders. Do all the holders of such an FD claim tax rebate?
— Vishal S.
According to section 80C of the Income-tax Act, 1961, a deduction is allowed to the taxpayer, for a term deposit made according to Bank Term Deposit Scheme, 2006 (Scheme) for a period of 5 years or more with any notified scheduled bank. Such a fixed deposit may be opened in joint ownership. However, according to the Scheme, the deduction u/s 80C will be available only to the first holder of the deposit. Further, if the first holder is not the one who has contributed to the term deposit, the deduction may be denied to him.
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(The author is a practising chartered accountant)
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