Pre-construction Interest
This query is : Resolved
11 September 2010
Dear Sir,
Please calculate the pre-construction interest from the following information:
Mr. X had constructed a residential house in chennai in february 2006 for Rs. 30 lakhs. Part of the costs of construction was met by borrowals from the Housing Development corporation, at interest of 12.5% p.a. The loan was taken on june 2004. The loan outstanding at the beginning of the current year was Rs. 16,00,000/-. The rate of interest applicable for the current year was reduced to 9% p.a. due to reduction in rates by almost all competitive banks. He has also borrowed from some relatives Rs. 4,00,000/- on which interest at 15% p.a. was due. The property had been let out soon after completion.
Please calculate the pre-construction interest from the following information:
Mr. X had constructed a residential house in chennai in february 2006 for Rs. 30 lakhs. Part of the costs of construction was met by borrowals from the Housing Development corporation, at interest of 12.5% p.a. The loan was taken on june 2004. The loan outstanding at the beginning of the current year was Rs. 16,00,000/-. The rate of interest applicable for the current year was reduced to 9% p.a. due to reduction in rates by almost all competitive banks. He has also borrowed from some relatives Rs. 4,00,000/- on which interest at 15% p.a. was due. The property had been let out soon after completion.
11 September 2010
Dear Sir,
Here What does mean of current year?? I assueme that it is for 2009-10.
Now, pre-construction period of your house is from June 2004 to Feb'2006, i.e., 1 years and 9 months.
Interst for the same period will be:
= 16,00,000*12.5/100*21/12 = 358400.
Now, Pre-construction interest will be Rs. 3,58,400 and this can be claim in five equal installments, therefore first installment will be start from the year 2006-07 and last year of claiming pre-construction interest will be 2010-11.
= 3,58,400/5 = Rs. 71,680.
Assumtions:
1) Assumed that only Rs. 16,00,000 will be taken from bank at 12.5%
2)Starting date of loan is 1st-june-2004 and completion of construction date is 28-feb-2006.
3) Loan from relative is not included in above computation, however, if that has same period then Pre-construction interest rate will also be computed on that amount as per above computation @15% and this will also be eligible for 5 installments.
4) Post-construction period is not included in above computation.
Regards!!!
Dinesh S. Adhikari
Here What does mean of current year?? I assueme that it is for 2009-10.
Now, pre-construction period of your house is from June 2004 to Feb'2006, i.e., 1 years and 9 months.
Interst for the same period will be:
= 16,00,000*12.5/100*21/12 = 358400.
Now, Pre-construction interest will be Rs. 3,58,400 and this can be claim in five equal installments, therefore first installment will be start from the year 2006-07 and last year of claiming pre-construction interest will be 2010-11.
= 3,58,400/5 = Rs. 71,680.
Assumtions:
1) Assumed that only Rs. 16,00,000 will be taken from bank at 12.5%
2)Starting date of loan is 1st-june-2004 and completion of construction date is 28-feb-2006.
3) Loan from relative is not included in above computation, however, if that has same period then Pre-construction interest rate will also be computed on that amount as per above computation @15% and this will also be eligible for 5 installments.
4) Post-construction period is not included in above computation.
Regards!!!
Dinesh S. Adhikari
12 September 2010
Dear Sir,
Please read the last line of question, "The property had been let out soon after completion", so, the construction of the property was not completed. Why need to assume the fact.
Please clarify!!!
Please read the last line of question, "The property had been let out soon after completion", so, the construction of the property was not completed. Why need to assume the fact.
Please clarify!!!
10 August 2024
https://docs.google.com/document/d/1fEtZW-TnkuzbW4CL9oRAYddzsCH5o4UtcHLxvdgE8LI/edit?usp=sharing
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- GST on export of services and Input Credit
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- ITC temporary reversal and reclaim
- Applicable TDS rate for sale of property in Nov 2024
- Inventory of finished goods
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- GST ON EXPORT COMMISSION
- Should I report my US salary for January, February, March in Schedule FA?
- Sale of property furniture sale
- Confusion around Form 26QB fields
- Adjustment entry in the case of Individual and HUF on 31st March
- Stock difference tax applicable on composite rate or normal rate
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
Trending Online Classes
CAclubindia
