One of my friend has taken home loan from bank. For getting loan, he has registered the document with the registrar in the name of bank by submitting the Memorandum of deposit of title deeds. In this regard he has paid a sum of Rs.12000 to registrar by DD. & To get approval for construction he paid some amount to local govt. Can he claim this amounts as deduction under any section of income tax?
20 July 2024
The expenses you mentioned can potentially be claimed as deductions under different sections of the Income Tax Act, depending on the nature of the expenses and the purpose for which they were incurred. Here’s a breakdown of how each expense can be treated for tax purposes:
### 1. Expenses Paid to Registrar for Document Registration:
When your friend paid Rs. 12,000 to the registrar for registering the document related to the home loan, this expense typically falls under the category of "Stamp Duty and Registration Charges" for the purposes of acquiring the property. Here’s how it can be claimed:
- **Section 80C**: The stamp duty and registration charges paid for registering the document related to the home loan can be claimed as a deduction under Section 80C of the Income Tax Act. The maximum deduction allowable under Section 80C is Rs. 1.5 lakh, which includes various specified expenses like stamp duty and registration charges.
### 2. Approval Fees Paid to Local Government:
If your friend paid any fees to the local government for obtaining approval for construction or any other related purposes, this can be considered under a different section:
- **Section 24(b)**: Interest on Housing Loan - The interest paid on the housing loan taken for the construction or purchase of a property is eligible for deduction under Section 24(b) of the Income Tax Act. This deduction is allowed on the interest paid during the financial year, subject to certain conditions.
- **Section 80EEA**: Additional Deduction on Interest - If your friend is a first-time homebuyer and meets the conditions specified under Section 80EEA, he may be eligible for an additional deduction on the interest paid on the home loan.
- **Section 80C**: Although not directly related to approval fees, it’s important to note that any principal repayment towards the home loan can also be claimed as a deduction under Section 80C, along with other eligible expenses like stamp duty and registration charges.
### Summary:
- **Stamp Duty and Registration Charges**: Claimable under Section 80C, subject to the overall limit of Rs. 1.5 lakh. - **Interest on Housing Loan**: Claimable under Section 24(b) and possibly under Section 80EEA if applicable.
Your friend should ensure that proper documentation and receipts are maintained for these expenses to substantiate the claims while filing the income tax returns. It’s advisable to consult with a tax advisor or chartered accountant to maximize the benefits of these deductions and to ensure compliance with current tax laws.
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