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Claiming HRA & Housing loan when house is under construction

amit (finance professional) (50 Points)

05 January 2009

Hi All,

Please resolve the below query.

Can some one claim HRA and Housing loan interest in the same city under below condition:-

House is under construction and builder has given tentative date of possession in the year 2010. Person has started paying housing loan interest from year 2008 as well as he is paying rent in the same city. Can he claims both, HRA and housing loan interest for the finacial year 2008, 2009, 2010 by residing in the same city.

Waiting for the response.

Thank you.

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5 Replies

CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 05 January 2009

Interest of Pre-Construction period is not allowable u/s.24b. It will be allowed in five equal annual installment commencing from the year in which flat is acquired or constructed.

However, he can claim HRA in respect of rent paid. (Refer Sec.10 (13A)

Thanks,

CA. Ashok Shah

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CA Sudhir Halakhandi (PRACTICING CHARTERED ACCOUNTANT) (13401 Points)
Replied 05 January 2009

PLEASE REFER THE EXPLANATION TO SECTION 24b IN THIS RESPECT :-

Explanation.—Where the property has been acquired or constructed with borrowedcapital, the interest, if any, payable on such capital for the period prior to theprevious year in which the property has been acquired or constructed, as reducedby any part thereof allowed as a deduction under any other provision of this Act,shall be deducted under this clause in equal instalments for the said previous yearand for each of the four immediately succeeding previous years;

FURTHER AT PRESENT HE CAN CALIM DEDUCTION OF HRA UNDER SECTION 10(13A)