Hello,
Could you please let me know whether Deduction U/s. 24(b) can be claimed if loan is taken from a relative any not from any financial institution ?
Also what documents would be required for this claim?
Thanks!
14 Replies
NAGARAJAN
(TAX CONSULTANT)
(21 Points)
Replied 23 September 2008
yes you can, it is advisable to pay the interest by account payee cheque and deduct tax @ source on interest payment
(Guest)
Tuesday, September 23, 2008
From
Vishram Ratnuji Modak,
Santacruz (East), Mumbai.
Cell # 9969 354 690
Email: vishrammodak @ gmail.com
Sub: Reply to your query & My Sublime Wishes
Respected Dear Ms. Neha Phadke Madam,
1. Good Morning, We are all fine here, I do hope you and your loving family are all fine & great.
2. I am awfully happy to learn that you have mulling over sanguinely towards your studies for your CA. Further I do believe with certitude you shall be a “Professional Chartered Accountant”. Secondly the depth {Your Query} with which your genial goodself is pursuing CA is really commendable.
3. This is germane to your query, Yes Loan taken from relatives and used for “specified purpose” inter-alia construction of house, purchase of house is a valid loan as per the provision of Sec 24 of the Income Tax Act, 1961.
4. Accordingly Interest paid on such loan even though taken from relatives and or any other person is allowed as a deduction u/s 24(b) subject to the limits so specified i.e. In case of a SOP its Rs.1,50,000/- per previous year and in case of LOP its without any maximum limit per previous year provided such loan is taken after 1/4/1999.
5. To claim the captioned deduction u/s 24(b), legally speaking it should be a transaction valid & acceptable in the eyes of law in case it has to be proved in the Court of Law. Ergo, such loan lending & borrowing {Loan Agreement} should be on a prescribed amount of Stamp Paper duly specifying the loan amount, the purpose, the tenure, the rate of interest as well as the payment schedule. To sum up, it should be in the same way if you would have taken a loan from a Housing Finance Co. or a Bank.
6. Needless to state do feel free to contact me for any sort of co-ordination, it will be an honour for me and rest assured it will be acknowledged sanguinely. May the Great God shower his sublime benedictions on your kind goodself and on yours loving family.
Take Care,
With Respect & Best Wishes,
Vishram R. Modak
CA Final Student
(Guest)
| Originally posted by :Neha Phadke | ||
| " | Hello, Could you please let me know whether Deduction U/s. 24(b) can be claimed if loan is taken from a relative any not from any financial institution ? Also what documents would be required for this claim? Thanks! |
" |
HELLO,
YES, YOU CAN CLAIM FOR TAKE DUDUCTION U/S 24 (b). BUT WHEN YOU TAKE LOAN . IT SHOULD BE BY CHEQUE OR DRAFT BECAUSE YOU CAN'T TAKE LOAN IN CASH MORE THAN 20000/- SO, WHEN YOU GIVE THE PAYMENT OF INTEREST, IT SHOULD BE GIVE BY CHEQUE OR DRAFT. AFTER TAX DEUDTED @ SOURCE. THEN YOU TAKE THIS DUDUCTION.
(Guest)
| Originally posted by :Neha Phadke | ||
| " | Hello, Could you please let me know whether Deduction U/s. 24(b) can be claimed if loan is taken from a relative any not from any financial institution ? Also what documents would be required for this claim? Thanks! |
" |
HELLO,
YES, YOU CAN CLAIM FOR TAKE DUDUCTION U/S 24 (b). BUT WHEN YOU TAKE LOAN . IT SHOULD BE BY CHEQUE OR DRAFT BECAUSE YOU CAN'T TAKE LOAN IN CASH MORE THAN 20000/- SO, WHEN YOU GIVE THE PAYMENT OF INTEREST, IT SHOULD BE GIVE BY CHEQUE OR DRAFT. AFTER TAX DEUDTED @ SOURCE. THEN YOU TAKE THIS DUDUCTION.
K.Prasanna
(Audit Manager)
(35 Points)
Replied 23 September 2008
| Originally posted by :nagaraj p | ||
| " | yes you can, it is advisable to pay the interest by account payee cheque and deduct tax @ source on interest payment | " |
Individual cannot deduct TDS.
Radhika
(Articleship)
(110 Points)
Replied 23 September 2008
Yes I do think as an individual TDS cannot be deducted from the payment that you make to the relative. The whole transasction should be clear in the face of law. There should be necessary basic documents made availaable.
(Guest)
| Originally posted by :Neha Phadke | ||
| " | Hello, Could you please let me know whether Deduction U/s. 24(b) can be claimed if loan is taken from a relative any not from any financial institution ? Also what documents would be required for this claim? Thanks! |
" |
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 08 November 2008
Deal all,
I think you all know that interest due on account of borrowed capital from relative is allowable u/s. 24(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with such borrowed capital, however regarding documents ? ? ?
The borrower is require to get Certificate from lender (in our case relative) specifying the amount of interest payable by the borrower for particular year and purpose of such borrowing initially.
The actual amount repaid towards borrowed funds are not require in such certificate as interest allowable u/s 24(b) is on due basis.
Normally repayment cum interest schedule is made for the purpose of documentation at the time of lending the funds.
Regards
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