Home loan interest

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2014 I had taken loan from bank and part of it from parents for my home. Have not paid any interest on loan from parents nor have done repayment of loan to parents. Now my interest on bank loan had reduced below 150000/-. Can I claim interest on loan from parents for tax deduction under relevant provision of income tax act

Deepti Asawa

Deepti Asawa (Expert)
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25 May 2014 Tax Benefit on Home Loan for payment of Interest is allowed as a deduction under Section 24 of the Income Tax Act. As per Section 24, the Income from House Property shall be reduced by the amount of Interest paid on Home Loan where the loan has been taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property.
It is also important to note that this tax deduction of Interest on Home Loan under Section 24 is deductible on payable basis, i.e. on accrual basis. Hence, deduction under Section 24 should be claimed on yearly basis even if no payment has been made during the year.
so that you can claim interest on loan from parents ( accrual basis )

Querist : Anonymous

Querist : Anonymous (Querist)

26 May 2014 Thanks...Is there some requirement which should be ensured such that such an interest on loan from parents is not disallowed.?

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Deepti Asawa

Deepti Asawa (Expert)
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26 May 2014 Loan can be taken from any body,unlike section 80C where the specified institutions has been given .In section 24(b) no institution has been defined ,means interest payable even to friend /relative etc for House is also deductible under section 24(b)

Querist : Anonymous

Querist : Anonymous (Querist)

26 May 2014 Thanks once again. My specific query is only because I have never paid interest in past 4 years and will be paying interest now. Secondly is there some documentation /formality required for substantiating my claim of interest on loan from parents as deductible amount.

Deepti Asawa

Deepti Asawa (Expert)
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26 May 2014 Interest payment to friends and relatives can be claimed u/s 24 but only against a certificate received from them. In the absence of the certificate, you would not be eligible for the deduction. The recipient of interest income who issues the certificate is liable to pay tax on the interest income that he receives.