Ded. u/s 80C for housing loan principle payment

Analysis OF Housing Loan (Sec 80c and 24B)

Originally posted by : Nitu Agarwal
	Can an assessee claim deduction u/s 80C for housing loan principle paid during the year if the house is under construction?

query is not clear, 

if the loan is taken for construction of house by self, then yes its deductible

if the loan is obtained to buy from builder and its not yet completed, then NO 

80 C deduction for loan repayment for under construction house should be available only if the construction is completed before the end of the previous year for which deduction is to be claimed.

In order to claim the principal repayment on loan borrowed for house property as deduction, the construction of such property should have been completed and is chargeable to tax under the head "income from house property" . If the property is under construction, principal repayment does not qualify for deduction.

80 C deduction for loan repayment for under construction house should be available only if the construction is completed before the end of the previous year for which deduction is to be claimed hence in your case no deduction

No u/s 80C for housing loan principle payment. Only for Housing loan Interest deduct . If Self occupied interest exemption maximum Rs.150000/-. Otherwise full Interest claim when not self occupied

In order to claim the principal repayment on loan borrowed for house property as deduction, which is under construction   is chargeable to tax under the head "income from house property" .  and deductible u\s 24

u\s 80c no deduction is available for uder construction house

So it means that assessee will never get any benefit for housing loan principle paid during construction period. Then why it is so that Pre construction interest can be claimed in later years but no benfit for principle payment?

Now my point of view is that--

There is nothing contained in sec 80C that possession is necessary for claiming deduction for principal payment. So an assessee can claim deduction even if construction is not completed.

opinions are invited for discussion...

Yes,

As per my understanding, you can claim 80C deduction on principal amount (subject to maximum ceiling) even during the construction period.

It is clearly mentioned that following payments are not qualified for the purpose of 80C:

"the cost of any addition..................which is carried out after completion...........after house property either has been occupied by assessee or any other person on his behalf"

So if you are paying the principal amount (taken for construction before possession) then it will be qualified under Sec80C, it is immaterial whether you are claiming it during construction or post construction.

the criteria of underconstruction or finish construction is irrelevant but the condition is that house belong to you or not, 

to claim the 80C benefit you have to be owner of property, on which the loan is taken 

if u claim for any payement made to builder for a property which is under construction and not transfered to you in previous assessment year, then the payment made to builder is "advance", and does not qualify for repayment of housing loan.

f the land is yours and you are constructing building with self on self owned land, then its all yours, building is addition to property which you own and the repayment qualify for deduction. 

yes, 80C deductions can be claimed on principal repayment during the construction period, there is no condition that construction should ve been completed in order to claim u/s 80C.

it says, repayment of amout borrowed by assessee "for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property”.

hence it can be claimed during the construction period.

3. According to the provisions of sub-clause (ii) of clause (h) of sub-section (2) of section 80C, in computing the total income of an assessee, a deduction shall be allowed for any sum paid towards the purchase or construction of a residential house property subject to the fulfilment of the conditions laid down therein.  For the admissibility of this deduction, the construction of the house property should be completed after 31-3-1987 and the income from the same should be chargeable to tax under the head ‘Income from house property’ in the relevant assessment year.  For the guidance of Drawing and Disbursing Officers and other persons responsible for the payment of income chargeable under the head ‘Salaries’, it is clarified that in a case where the construction of the property does not get completed by the end of the previous year relevant to the assessment year 1988-89, no deduction under this provision shall be admissible to the assessee in the assessment of his income for this assessment year.  This aspect may please be kept in mind while deducting the tax at source under section 192 in the financial year 1987-88.

Circular : No. 498 [F. No. 275/111/87-IT(B)], dated 4-11-1987.

https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/sec_080c.htm

the above provisions and conditions are applicable upto A.Y: 90-91

  for the purposes of purchase or construction of a residential house property the construction of which is completed after the 31st day of March, 1987, and the income from which is chargeable to tax under the head “Income from house property” (or which would, if it had not been used for the assessee’s own resi­dence, have been chargeable to tax under that head), where such payments are made towards or by way of—

and the deduction u/s 80C has been withdrawn w.e.f. 1.4.91 to 31.3.06. and while re introduced by finance act 2005, the condition has been removed.