03 June 2009
Interest paid on loan taken for purchase, construction, repairs, renewals or reconstruction of a house property will qualify for deduction under Section 24 in computing the income from house property. Distinction is not made between loans taken from a HFC and from others, including friends and relatives. Interest paid to friends and relatives on the loan taken for acquiring the flat claimed as a deduction. ABD is son of EFG. Father gave a loan to son for purchase house on usual terms.(through bank a/c transactions Subsequently, son(ABD) has given loan to father for purchase of house (in the same year) on having different tenures,terms & interest rates. Father & Son are privately emplyed.Since Job market is volite now a days, either/both can securitise the loan/interest among other friends/relitives for liquidity-if need be-, without foregoing tax deduction on home loan interest.Are the transaction OK from Income tax angle? If yes, elabarate prcedure & precautions.
03 June 2009
Section 24 of the Income Tax Act 1961,is clear about the lender,only thing the whole transaction should stand tax scrutiny in other words Chapter XXV requirements of the same Act should be satisfied.
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