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Housing Loan Principal Deduction

Ninad Pandit (CA Final Student) (254 Points)

26 July 2010

Whic amount of housing loan principal is allowed under 80C deduction ?

Actual Paid amt or payabe amt.?

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20 Replies

Ajay Garg (CA FINAL) (101 Points)
Replied 26 July 2010

DEDUCTION U/S 80C IS AVAILABLE ONLY ON PAYMENT BASIS, NOT ON ACCRUAL BASIS. SO, DEDUCTION WILL BE TO THE EXTENT OF PAID AMOUNT OF HOUSING LOAN PRINCIPAL.

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Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 26 July 2010

Deduction allowed only for principal portion actually paid during the FY under section 80C....

Regards,

Manoj

CA Debasis Sahoo (SALARIED) (40 Points)
Replied 26 July 2010

deduction under section 80C is applicable on the basis of payment not on the basis of accrual, basically the fundamental of deduction u/s 80C is to ensure that assessee actually incured some expenditure on specified head from his taxable income.

CA Sumit Arora (CA) (1411 Points)
Replied 26 July 2010

Deduction Will be allowed on payment basis.

Amit Gupta (Loosening Myself) (1508 Points)
Replied 26 July 2010

Deduction allowed only if Actually Paid.

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Ninad Pandit (CA Final Student) (254 Points)
Replied 27 July 2010

& wat abt housing loan interest? deduction for paid amt or payable amt?

DT Fundas - Tarun rustagi ( Author) (1150 Points)
Replied 27 July 2010

dear ninad

principal amount deduction is allowed on payment basis under sec. 80C but remember it is allowed in that year in which construction is completed or in the year of year purchase.

interset is allowed for deduction u/s 24 u/h house property.there is no need for actual payment means interest is allowed on accrual basis.

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Ninad Pandit (CA Final Student) (254 Points)
Replied 27 July 2010

Dear Tarun

i know that principal amt deduction is allowed in 80C. Just wanted to confirm whether deduction of int. u/s24 is allowed on accrual basis or actual pymt basis. Anyways, thanx a lot for the info..

Shudhanshu Agrawal (Business) (2570 Points)
Replied 27 July 2010

Originally posted by : tarun rustagi
	dear ninad principal amount deduction is allowed on payment basis under sec. 80C but remember it is allowed in that year in which construction is completed or in the year of year purchase. interset is allowed for deduction u/s 24 u/h house property.there is no need for actual payment means interest is allowed on accrual basis.

Dear Tarun,

Can you tell me where it is written that deduction u/s 80C shall be allowed only after completion of construction??

DT Fundas - Tarun rustagi ( Author) (1150 Points)
Replied 27 July 2010

dear sudhanshu

sec.80 C deduction is allowed in case of principal amount repayment for residential house property.and residential means it is in the condition where one can leave.it is not written clearly in the section but the word used is residential.

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Batul (Article assistant) (207 Points)
Replied 27 July 2010

Home Loan Principal Repayment: The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest.The principal component of the EMI qualifies for deduction under Sec 80C. Even the interest component can save you significant income tax – but that would be under Section 24 of the Income Tax Act. Please read “Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage”, which presents a full analysis of how you can save income tax through a home loan.

Sanjay Singh Rana (CA) (208 Points)
Replied 27 July 2010

Originally posted by : Ninad
	Dear Tarun i know that principal amt deduction is allowed in 80C. Just wanted to confirm whether deduction of int. u/s24 is allowed on accrual basis or actual pymt basis. Anyways, thanx a lot for the info..

Hi Ninad,

u/s 24 (b) deduction of interest is allowable on payable basis not on paid basis.

in case of confusion please tell

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 27 July 2010

Dear Tarun,

Section 80C clearly specifies that any payment made towards cost of purchase or construction of residential property and doesn't specifies that it is available only after construction get complete. If pay the advance amount to the builder and sale agreement has been executed between u and developer which also registered with registrar. u can get the deduction under 80C even if contruction of building not completed at the time of advance. On the same condition, deduction would be available for principal repayment whether or not the construction gets completed.

Residential means property meant for residential purpose and should not be interprete as one has to actual live in that place.

Regards,

Manoj

DT Fundas - Tarun rustagi ( Author) (1150 Points)
Replied 27 July 2010

dear manoj can u tell me that what is the meaning of residential according to you as u submitted in ur post. according to me deduction is available but in the year in which construction is completed.