Int. on Housing Loan- AY 21-22 ( Due to COVID.... )

Great question! Here’s the clarity on claiming interest deduction on a housing loan during the COVID moratorium period:

• The Interest on Housing Loan deduction under Section 24(b) (up to ₹2 lakh for a self-occupied property) is allowed only on the interest actually paid during the financial year.

• During the COVID moratorium period, banks were allowed not to charge or debit interest, or the payment of interest was deferred.

• So, if the bank did not charge or collect interest for those 6 months (moratorium period), that interest is not considered paid by the assessee in that financial year.

• Consequently, the deduction is limited to the interest amount actually paid/ debited during the year as per the bank certificate.

• Even if the assessee paid installments during moratorium, the part of installment that relates to interest not charged by the bank cannot be claimed as deduction because the interest was never due or paid.

• Hence, the assessee cannot claim deduction on the 'deferred' interest amount not charged by the bank.

• This has been clarified by CBDT and courts have upheld that deduction depends on actual payment.

In short: Interest deduction = Interest actually paid or debited, not accrued or waived off.