House building loan
This query is : Resolved
14 April 2013
Dear Sir, I have a House Building loan, I am a salaried person.For this loan I got tax benefit U/S 24 For interst amount(Rs.15622), & For Principle amount (Rs.14400) I got Tax benefit U/S 80c.Now From A.Y-2014-2015 only my Principle amount will be Nil.Now Can I invest my Principle amount in NSC to get tax benefit U/S 80c, Or what will be the best Investment for tax savings?
Can I get the Deduction U/S 24 (For interest) After Investing the principle amount to NSC or any other Scheme?
Can I get the Deduction U/S 24 (For interest) After Investing the principle amount to NSC or any other Scheme?
14 April 2013
First please be confirm me why your principle amount will zero. Is you bank employee?
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
14 April 2013
Don't be think why i asked the above? there is some reason behind on asking of above question to give my suggestion and reply and answer.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
14 April 2013
Yes I am a Bank Employee.
Thank you for giving response.
Thank you for giving response.
14 April 2013
So, i thinking you committed a small mistake till now. By that mistake you loose a benefit of some deduction first i go the mistake committed by you and later come to the suggestion your request.
The mistake committed by you thinking by me is in next reply.
OM SAI SRI SAI JAI JAI SAI
The mistake committed by you thinking by me is in next reply.
OM SAI SRI SAI JAI JAI SAI
14 April 2013
To analysis the mistake by you and before to go that mistake once we revise the section 24(b) and section 80C for the portion of principle payment of housing loan and the bank policy to adjust the repayment amount by the staff for their loans.
Section 24(b) : According to this section an assessess is eligible to claim deduction of interest on housing loan either accrued or repaid for the year. I.e even interest amount not paid just basis on the accrual you can claim interest for deduction u/s 24(b) example for the Year 2012-13 bank debited Rs.10000 to the housing loan account towards the interest on loan but the assesseee didn't paid any rupee to the bank during the year 2012-13 then also we shall claim section 24(b) deduction.
Section 80C : according to this section repayment of principle portion to the loan shall be eligible for deduction. For example loan taken Rs. 100000 and Interest for the year 2012-13 debited Rs.10000 and the assessee paid Rs.12000 during the year then outstanding principle amount of loan on 31-3-2013 is Rs.98000 i.e Rs. 2000 paid towards principle amount of loan and this Rs.2000 eligible for deduction u/s80C.
Banking policy regards the its staff loan: According to the bank policy for the staff loans first it has been adjusted to the principle amount total repaid amount and after completion of the repayment of principle portion then it adjusted with the interest amount and if any other charges. This policy is big advantage to the bank employees because of they get the low charging of interest. For example if the loan taken by the bank staff Rs.100000 and interest for the year 2012-13 is Rs.10000 and the employee paid Rs.12000 then balance of principle portion of the loan as on 31-3-2013 is Rs.88000 i.e full amount of repayment adjusted towards principle amount and the interest amount of Rs.10000 keep in idle and shall recover after completion of principle amount of loan.I.e after repayment of Rs.100000 by the employee then it starts recovery of interest portion.
Is i am right in the above banking policy regarding staff loans.If not according to my knowledge i know the above policy and benefit for the bank staff in case if you not comes under above policy i.e you also comes under normal public policy then no question of no payment for principle portion because of for the public till completion or closing of atleast Rs.1 will be there as principle repayment. So I think you comes under bank staff policy.
Now i am coming to your mistake.
So according to the above section 24(b) you are eligible for deduction of Rs.10000 u/s 24(b) and as well as Rs.12,000 u/s 80C because of interest will be eligible for deduction on accrual basis and section 80C will be eligible for repayment basis and you made repayment to principle of Rs.12000 so it is eligible for deduction u/s80C. But you claimed Rs.10000 as deduction u/s 24(b) and Rs. 2000 for 80C deduction i.e you loose the Rs.10000 benefit of 80C deduction.
The above example is just for your understanding i doesn't consider the figures in your case for such example.
Now the due to such mistake how you loose the benefit i will explain in my next reply.
OM SAI SRI SAI JAI JAI SAI
Section 24(b) : According to this section an assessess is eligible to claim deduction of interest on housing loan either accrued or repaid for the year. I.e even interest amount not paid just basis on the accrual you can claim interest for deduction u/s 24(b) example for the Year 2012-13 bank debited Rs.10000 to the housing loan account towards the interest on loan but the assesseee didn't paid any rupee to the bank during the year 2012-13 then also we shall claim section 24(b) deduction.
Section 80C : according to this section repayment of principle portion to the loan shall be eligible for deduction. For example loan taken Rs. 100000 and Interest for the year 2012-13 debited Rs.10000 and the assessee paid Rs.12000 during the year then outstanding principle amount of loan on 31-3-2013 is Rs.98000 i.e Rs. 2000 paid towards principle amount of loan and this Rs.2000 eligible for deduction u/s80C.
Banking policy regards the its staff loan: According to the bank policy for the staff loans first it has been adjusted to the principle amount total repaid amount and after completion of the repayment of principle portion then it adjusted with the interest amount and if any other charges. This policy is big advantage to the bank employees because of they get the low charging of interest. For example if the loan taken by the bank staff Rs.100000 and interest for the year 2012-13 is Rs.10000 and the employee paid Rs.12000 then balance of principle portion of the loan as on 31-3-2013 is Rs.88000 i.e full amount of repayment adjusted towards principle amount and the interest amount of Rs.10000 keep in idle and shall recover after completion of principle amount of loan.I.e after repayment of Rs.100000 by the employee then it starts recovery of interest portion.
Is i am right in the above banking policy regarding staff loans.If not according to my knowledge i know the above policy and benefit for the bank staff in case if you not comes under above policy i.e you also comes under normal public policy then no question of no payment for principle portion because of for the public till completion or closing of atleast Rs.1 will be there as principle repayment. So I think you comes under bank staff policy.
Now i am coming to your mistake.
So according to the above section 24(b) you are eligible for deduction of Rs.10000 u/s 24(b) and as well as Rs.12,000 u/s 80C because of interest will be eligible for deduction on accrual basis and section 80C will be eligible for repayment basis and you made repayment to principle of Rs.12000 so it is eligible for deduction u/s80C. But you claimed Rs.10000 as deduction u/s 24(b) and Rs. 2000 for 80C deduction i.e you loose the Rs.10000 benefit of 80C deduction.
The above example is just for your understanding i doesn't consider the figures in your case for such example.
Now the due to such mistake how you loose the benefit i will explain in my next reply.
OM SAI SRI SAI JAI JAI SAI
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14 April 2013
So according to the bank policy after completion of principle portion it will start recovery of interest portion. So when is the principle amount is Zero then the interest amount also zero.For example assume on 31-3-2013 your principle portion of loan is ZERO i.e opening balance of principle portion of loan on 1-4-2013 is ZERO thus interest for 2013-14 is also ZERO i.e there is no accrual of interest for 2013-14.
So according to the section 24(b) accrual of interest is important to claim deduction under this section so for your loan there is no accrual of interest for 2013-14 i.e you are not eligible for deduction u/s 24(b).
However there is no repayment of principle portion of loan so section 80C deduction also not available.
In case if any interest charging by the bank on the interest portion for the year 2013-14 then it is like as penal interest and late fee for non payment so according to the section 24(b) penal interest or late fee not eligible for deduction under this section.
Thus from 2013-14 you can't claim either interest portion or principle portion for deduction.
However for the committed of above mistake you have to loose the benefit.
Please don't be think why i gave the above brief explanation and why considered mistake committed etc... because on explaining of the above it is relavent to my answer. So please don't feel if i hurted you due to the above explanation please excuse me and i am sorry to that.
However simple conclusion for the above explanation in my next reply.
OM SAI SRI SAI JAI JAI SAI
So according to the section 24(b) accrual of interest is important to claim deduction under this section so for your loan there is no accrual of interest for 2013-14 i.e you are not eligible for deduction u/s 24(b).
However there is no repayment of principle portion of loan so section 80C deduction also not available.
In case if any interest charging by the bank on the interest portion for the year 2013-14 then it is like as penal interest and late fee for non payment so according to the section 24(b) penal interest or late fee not eligible for deduction under this section.
Thus from 2013-14 you can't claim either interest portion or principle portion for deduction.
However for the committed of above mistake you have to loose the benefit.
Please don't be think why i gave the above brief explanation and why considered mistake committed etc... because on explaining of the above it is relavent to my answer. So please don't feel if i hurted you due to the above explanation please excuse me and i am sorry to that.
However simple conclusion for the above explanation in my next reply.
OM SAI SRI SAI JAI JAI SAI
14 April 2013
No NO why I feel hurted,thnak you for giving your valuable explanation.
14 April 2013
Due to the full repayment of principle amount of loan there is not charging and debiting of interest to the loan account so section 24(b) deduction not eligible as well as there is no repayment of principle portion so section 80C deduction not available. even though bank charging interest on interest portion due after completion of repayment of principle amount of loan then it is like penal interest and penal interest not eligible for deduction u/s24(b). In case if the bank first adjusting to the interest amount and any other charges from the repayment amount and if any excess amount then such amount adjusting to the principle amount(i.e like for public loans) then no question of non payment of principle amount of loan till its close.
Now answer and suggestions to your query in the next reply.
OM SAI SRI SAI JAI JAI SAI
Now answer and suggestions to your query in the next reply.
OM SAI SRI SAI JAI JAI SAI
14 April 2013
Due to the no outstanding of principle amount of loan bank will not charge the interest i.e no accrual of interest on principle portion of loan so you are not eligible for deduction u/s 24(b).
Now coming to the suggestion you required regarding investment in savings:
1) Yes, you can invest in NSC to get the deduction u/s80c for tax saving purpose. But if you invested in NSC every year interest portion on the NSC as per accrual basis you have to offer as income from other sources as well as the same shall be eligible for deduction 80C. for example for the first year of investment in NSC interest accrued Rs.1000 then you have to offer this Rs.1000 under the income from other sources for the first year and the same i.e Rs.1000 shall be deductable u/s80C(i.e investment in 80c savings) However this benefit i.e claiming of deduction u/s80C not eligible for the matured year of NSC bonds as well as you have to take every year NSC bonds to save your tax.
2) Another source to save your tax you can invest in Life insurance policy. It is the best way to savings because of it covers risk and supports our family in future and the maturity or claim benefits and amount of maturity or claim is fully exempted to tax but the only one condition is the premium paid amount didn't be exceeded 10% of the sum assured per annum. for example if you taken Rs. 100000 insurance policy in the year 2013-14 then premium paying or paid amount for that policy for the year 2013-14 shall not exceed Rs.10000. However surrender of the policy will be taxable but it depending on the year of surrender. As well as every year you need not to show for the investments because of it is fixed investment for the long years like 10,15 etc..
3) However there is some other savings for tax benefit like investment in Mutual funds, investment in tax savings deposit, investment in PPF account, Investing for the purpose of childrens education as tuition fee. In this above except investment in tax savings deposit all other maturity benefits are exempted to tax(however some conditions applicable to maturity period etc). In the case of tax savings deposit scheme interest portion on such deposit amount shall be taxable either accrual basis or cash basis with choice of you.
So my suggestion is for the investment for tax purpose is better to invest in LIC, PPF.
For any doubt or further clarification please ask freely you doubt or query with this regards.
OM SAI SRI SAI JAI JAI SAI
Now coming to the suggestion you required regarding investment in savings:
1) Yes, you can invest in NSC to get the deduction u/s80c for tax saving purpose. But if you invested in NSC every year interest portion on the NSC as per accrual basis you have to offer as income from other sources as well as the same shall be eligible for deduction 80C. for example for the first year of investment in NSC interest accrued Rs.1000 then you have to offer this Rs.1000 under the income from other sources for the first year and the same i.e Rs.1000 shall be deductable u/s80C(i.e investment in 80c savings) However this benefit i.e claiming of deduction u/s80C not eligible for the matured year of NSC bonds as well as you have to take every year NSC bonds to save your tax.
2) Another source to save your tax you can invest in Life insurance policy. It is the best way to savings because of it covers risk and supports our family in future and the maturity or claim benefits and amount of maturity or claim is fully exempted to tax but the only one condition is the premium paid amount didn't be exceeded 10% of the sum assured per annum. for example if you taken Rs. 100000 insurance policy in the year 2013-14 then premium paying or paid amount for that policy for the year 2013-14 shall not exceed Rs.10000. However surrender of the policy will be taxable but it depending on the year of surrender. As well as every year you need not to show for the investments because of it is fixed investment for the long years like 10,15 etc..
3) However there is some other savings for tax benefit like investment in Mutual funds, investment in tax savings deposit, investment in PPF account, Investing for the purpose of childrens education as tuition fee. In this above except investment in tax savings deposit all other maturity benefits are exempted to tax(however some conditions applicable to maturity period etc). In the case of tax savings deposit scheme interest portion on such deposit amount shall be taxable either accrual basis or cash basis with choice of you.
So my suggestion is for the investment for tax purpose is better to invest in LIC, PPF.
For any doubt or further clarification please ask freely you doubt or query with this regards.
OM SAI SRI SAI JAI JAI SAI
15 April 2013
Thank you for your valuable Feedback.I have another question according to your answer.In your "Banking policy regards its staff loan" column you said that if I paid Rs.12000 then it will be taken as my principle amount,but I can avail the facility of rs.10000 u/s 24b(as interest accrued),then when bank will recover my interest amount? what is the meaning of "interest amount rs.10000 keep in idle"?
Suppose I repaid my principle amount in 8 years(12000*8+4000),then interest accrued rs.80000. after 8 years when I start to repay the interest amount(80000),then bank will not charge any interest on interest amount?as the amount get blocked for 8 years.
Thank you for your valuable Feedback.I have another question according to your answer.In your "Banking policy regards its staff loan" column you said that if I paid Rs.12000 then it will be taken as my principle amount,but I can avail the facility of rs.10000 u/s 24b(as interest accrued),then when bank will recover my interest amount? what is the meaning of "interest amount rs.10000 keep in idle"?
Suppose I repaid my principle amount in 8 years(12000*8+4000),then interest accrued rs.80000. after 8 years when I start to repay the interest amount(80000),then bank will not charge any interest on interest amount?as the amount get blocked for 8 years.
15 April 2013
I mean keep in idle means it shall be held as separate and recover it after the completion of principle portion amount. I.e Interest amount not debit to the loan account it keep as another separate account. What you used Blocked for 8 years for the same meaning i used the word Idle. So from 2013-14 bank not charging interest from you so there is no interest on housing loan so no deduction available u/s 24(b). Is you clear now other wise please ask any further doubt.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
15 April 2013
Hello Sir,You are not able understand my last query, I want to know as I bolcked Bank's interest for 8 years for this bank will not charge any interest on total interest of rs.80000?
15 April 2013
I understanding your question. The interest portion on the loan shall be collected by the bank after complete collection of Principle amount. I.e collection of interest amount of Rs. 80000 previously accrued in your loan account will start from 2013-14 year. Is it correct and am i right? this regards.
So while collection or recovering of interest portion bank will not charge any interest on interest amount is it correct? since there is no accrued interest in loan account then no deduction u/s 24(b).
Is you get clarified or any further clarification please ask.
OM SAI SRI SAI JAI JAI SAI
So while collection or recovering of interest portion bank will not charge any interest on interest amount is it correct? since there is no accrued interest in loan account then no deduction u/s 24(b).
Is you get clarified or any further clarification please ask.
OM SAI SRI SAI JAI JAI SAI
15 April 2013
If my view is different then please explain the meaning of Blocked according to you.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
15 April 2013
OK then tell me,from 2013-14 Bank will start to recover rs.80000
without any interest?mean bank will recover only rs.80000.
Block mean,interest of rs.10000 of bank with me for 8 years,rs.20000 for 7 years,rs.30000 for 6 years and so on.for this bank will not charge any interest??
without any interest?mean bank will recover only rs.80000.
Block mean,interest of rs.10000 of bank with me for 8 years,rs.20000 for 7 years,rs.30000 for 6 years and so on.for this bank will not charge any interest??
15 April 2013
Yes, according to my knowledge bank will collect only Rs. 80000 however it may be differ from bank to bank. I.e your bank may charge interest on Rs.80000. i.e interest on interest. If your bank charging interest on interest then it is called as penal interest and penal interest not eligible for deduction u/s 24(b) thus it mean from 2013-14 you have only penal interest so you didn't eligible for deduction u/s 24(b) from 2013-14.
Yes, you have the bank interest with you and the same has been paying after 8 years. I also saying this same in my above replies. and you are saying bank doesn't charge any interest on this amount so then there is no charging or accruing of interest from 2013-14 so no deduction from 2013-14.
Is you clear now. Still you have any doubt then please call me at 8985063892 this is A.P no. Because of i thinking my explanation is not proper according to clear understaing of you.
OM SAI SRI SAI JAI JAI SAI
Yes, you have the bank interest with you and the same has been paying after 8 years. I also saying this same in my above replies. and you are saying bank doesn't charge any interest on this amount so then there is no charging or accruing of interest from 2013-14 so no deduction from 2013-14.
Is you clear now. Still you have any doubt then please call me at 8985063892 this is A.P no. Because of i thinking my explanation is not proper according to clear understaing of you.
OM SAI SRI SAI JAI JAI SAI
15 April 2013
Are you surely satisfied the query and is resolved for your understanding and satisfication.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
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