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Personal loan tax benefit

Nikhil (Others) (26 Points)

11 December 2014

Hello All,

I took a personal loan to borrow land. This is a agricultural land. If i declare this investment in my investment declaration for the current financial year will i be able to avail the tax benefit for the interest i am paying on it.

Thanks,

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7 Replies

(Guest)

You can claim interest against agricultural income, if any.

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Manoj Gupta (B.Com, CA & CS) (416 Points)
Replied 11 December 2014

Hi Nikhil,

Firstly, as a principle "interest or repayment of loan" is allowed as a deduction only if it taken under a scheme approved by the any prescribed regulator therefore personal loan doesn't come under its perview.

Secondly, under sec 80Cbenefit of "interest or repayment of loan" is available only for purchase of residential property.

Nikhil (Others) (26 Points)
Replied 11 December 2014

Hi madhavi Under which section can i claim this benefit and what documents do i need to submit if i produce any income from the purchased agricultural land. Thanks,

CA Vap Patel (Practice) (1205 Points)
Replied 11 December 2014

Dear Nikhil,

Read Sub section 1 of section 14A of Income Tax Act,1961

"For the purposes of computing the total income under this chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this act."

Agricultural Income is exempt from tax so any expenditure incurred in relation to earning any income from agricultural will not be allowed. Hence Interest cost will not be allowed.

sonu bhati (india) (33 Points)
Replied 11 December 2014

Agriculture income is not a part of taxable so any expenditure in relation to agriculture income is not allowed as an extennis.

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Nikhil (Others) (26 Points)
Replied 11 December 2014

Ok got the point that any expenditure that i do related to agricultural and the income that i produce from it is tax free. So do i need to submit any documents for the expenditure i do on cultivation from the income that i earn from a different job..