25 August 2014
I had taken a home loan of Rs. 927130 in 2013-14 accounting year.Flat is under construction and so far it is not transferred in my name.I have paid 16150 for principal and 54580 for interest component.How to treat or what exemptions I am eligible for in accounting year 2013-14. Thank you in advance.Please help.
25 August 2014
Interest deduction is not allowed in 2013-14 as flat is under construction. It will be eligible from the year in which construction gets completed as pre construction period ineterst in 5 equal installments.
Principal dedcution is also not allowed for under construction property as sec 80C suggests that any payment (including principal repayment of housing loan) for the purpose of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” can be considered for tax benefit under Section 80C.
In other words, for consideration under Section 80C, the property should be capable of generating income (real or notional) which is chargeable under the head “Income from house property.” Section 22 and 23 of the Income Tax Act present the introduction to income from house property and determination of the annual value of a house property.
When a house property is under construction, there is no likelihood of income, and hence under Section 80C there is no provision for tax rebate on account of principal repayment. Only in the year in which the construction is completed can the principal repayment be considered for tax benefit.
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