Interest allowable

This query is : Resolved

P Hemanth Kumar (Querist)
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17 February 2012 Sir,

I have purchased vaccant land (plot) under Loan - 2 years back.

I may sell this land when good offer comes.

I am repaying the loan with interest till now.

My query is :
Is the interest so far paid will be allowable in my income. How it is to be calculated.
Suppose interest is not allowed now means, when it will be allowed. Sizeable interest i am paying from income.

Please solve my query.

Thanks

P.Hemanth Kumar

CA. Vikash Dwivedi

CA. Vikash Dwivedi (Expert)
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17 February 2012 no exemptions/ deductions on purchase of Land (Plot) is allowed.
At the time of sale the property shall be subject to ST Capital Gain if you sell in next 12 mnths.

Maninder Jain

Maninder Jain (Expert)
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18 February 2012 Unfortunately interest paid of capital borrowed for purchase of Vacant land is not allowed as deduction under any head of Incomne Tax.

However as a tax planning if you plan to hold the land for long, it will be better to built a small structure on the land & then let it to somebody at nominal rent. Then entire interest will be allowed from your other source of income.

Lets say if after construction you let out the structure @ 2000 Rs. per month rent & you pay interest @ 12000 Rs. per month, then Rs. 10000 deduction will be allowed from your income from other sources like salary, business income etc.

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