Income from house property
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 July 2014
my querey is regarding sec 24 .,(DEDUCTION UNDER HOUSE PROPERTY)
where housing loan taken, should from the financial institiutins or it can also be taken from private persons also??????
THANKS IN ADVANCE
where housing loan taken, should from the financial institiutins or it can also be taken from private persons also??????
THANKS IN ADVANCE
19 July 2014
you can take loan from private persons also.
Message likes :
1 times
Querist : Anonymous
Querist :
Anonymous
(Querist)
21 July 2014
then it can acts as tax evasion.,
EX: how means i can get certificate from my brother showing i borrowed housing loan.,
then i can get interest as deduction u/s 24.,
IS IT RIGHT
THANKS IN ADVANCE
EX: how means i can get certificate from my brother showing i borrowed housing loan.,
then i can get interest as deduction u/s 24.,
IS IT RIGHT
THANKS IN ADVANCE
29 July 2024
Under Section 24(b) of the Income Tax Act, which deals with deductions on account of interest on housing loans for the purpose of "Income from House Property," the following guidelines apply:
### Eligibility for Deduction Under Section 24(b)
1. **Sources of Loan**:
- **Financial Institutions**: The primary source of housing loans recognized for tax deductions includes loans taken from banks, financial institutions, or housing finance companies.
- **Private Persons**: Loans can also be taken from private individuals, including relatives or friends. The Income Tax Act does not restrict the source of the loan to financial institutions alone.
2. **Documentation and Proof**:
- **Loan Agreement**: Whether the loan is from a financial institution or a private person, it is essential to have a valid loan agreement or document that outlines the terms of the loan, including the amount borrowed, interest rate, and repayment schedule.
- **Interest Payments**: Payments of interest on the loan must be documented, and receipts or bank statements should be maintained as proof. This applies regardless of whether the lender is a financial institution or a private person.
3. **Certification from Private Lenders**:
- **Formal Documentation**: If the loan is from a private person, it is advisable to have a formal written agreement. While an informal certificate from a relative like a brother may serve as a record, it is better to have a detailed agreement outlining the loan terms to substantiate the interest deduction.
- **Interest Deduction**: As long as the loan is genuine, documented, and interest payments are made, you can claim the interest deduction under Section 24(b) regardless of the lender’s identity.
### Important Considerations
1. **Tax Evasion Risks**:
- **Genuine Transactions**: Ensure that the transaction is genuine and not a façade for tax evasion. Fabricating loan documents or falsifying transactions can lead to legal consequences and penalties.
- **Documentation**: Maintain proper documentation for all transactions. This includes loan agreements, payment receipts, and other relevant documents to support your claim if required by tax authorities.
2. **Income Tax Compliance**:
- **Disclosure**: Disclose all loan-related details accurately in your income tax return. Include the interest deduction under Section 24(b) in the appropriate section of your return.
### Practical Example
- **Loan from a Brother**: If you borrow from a brother, you should have a formal agreement or documentation reflecting the loan amount, terms, interest rate, and repayment schedule. Ensure you make regular payments and keep records of these payments.
- **Interest Deduction**: You can claim the interest paid on this loan as a deduction under Section 24(b), provided the documentation is in order and the transaction is genuine.
### Summary
- Loans from both financial institutions and private persons are eligible for interest deduction under Section 24(b), provided proper documentation and proof of genuine transaction are maintained.
- Ensure all transactions are genuine and well-documented to avoid any issues with tax authorities.
- Formalize the loan agreement to substantiate the interest deduction and comply with income tax regulations.
If you have further questions or need assistance with documentation or compliance, consulting a tax professional or financial advisor is advisable.
### Eligibility for Deduction Under Section 24(b)
1. **Sources of Loan**:
- **Financial Institutions**: The primary source of housing loans recognized for tax deductions includes loans taken from banks, financial institutions, or housing finance companies.
- **Private Persons**: Loans can also be taken from private individuals, including relatives or friends. The Income Tax Act does not restrict the source of the loan to financial institutions alone.
2. **Documentation and Proof**:
- **Loan Agreement**: Whether the loan is from a financial institution or a private person, it is essential to have a valid loan agreement or document that outlines the terms of the loan, including the amount borrowed, interest rate, and repayment schedule.
- **Interest Payments**: Payments of interest on the loan must be documented, and receipts or bank statements should be maintained as proof. This applies regardless of whether the lender is a financial institution or a private person.
3. **Certification from Private Lenders**:
- **Formal Documentation**: If the loan is from a private person, it is advisable to have a formal written agreement. While an informal certificate from a relative like a brother may serve as a record, it is better to have a detailed agreement outlining the loan terms to substantiate the interest deduction.
- **Interest Deduction**: As long as the loan is genuine, documented, and interest payments are made, you can claim the interest deduction under Section 24(b) regardless of the lender’s identity.
### Important Considerations
1. **Tax Evasion Risks**:
- **Genuine Transactions**: Ensure that the transaction is genuine and not a façade for tax evasion. Fabricating loan documents or falsifying transactions can lead to legal consequences and penalties.
- **Documentation**: Maintain proper documentation for all transactions. This includes loan agreements, payment receipts, and other relevant documents to support your claim if required by tax authorities.
2. **Income Tax Compliance**:
- **Disclosure**: Disclose all loan-related details accurately in your income tax return. Include the interest deduction under Section 24(b) in the appropriate section of your return.
### Practical Example
- **Loan from a Brother**: If you borrow from a brother, you should have a formal agreement or documentation reflecting the loan amount, terms, interest rate, and repayment schedule. Ensure you make regular payments and keep records of these payments.
- **Interest Deduction**: You can claim the interest paid on this loan as a deduction under Section 24(b), provided the documentation is in order and the transaction is genuine.
### Summary
- Loans from both financial institutions and private persons are eligible for interest deduction under Section 24(b), provided proper documentation and proof of genuine transaction are maintained.
- Ensure all transactions are genuine and well-documented to avoid any issues with tax authorities.
- Formalize the loan agreement to substantiate the interest deduction and comply with income tax regulations.
If you have further questions or need assistance with documentation or compliance, consulting a tax professional or financial advisor is advisable.
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?
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Confusion around Form 26QB fields
- GST ON EXPORT COMMISSION
- RCM INVOICING FROM NOV-2024
- Tds on building rent monthly
- Disallowance of Section 43B(h) to sez units
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- 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 ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
Trending Online Classes
CAclubindia
