Refund of interest on housing loan

Dear Friend,

In case of interest on housing loan there is a chance to avail deduction, whether it's a self occupied or a let out house. Here this flat under construction can be treated as self occupied and not generating any income. Here there are two things 

1. You have paid interest on housing loan

2. There is aproposal for refund of initial year HL interest from contractor/builder

As per income tax act, the interest on housing loan can be availed only on the the amount of interest paid in the respective financial year. Here if you are getting the entire interest refunded from the builder then you are not eligible for deduction. If the amount is refunded or adjested in the due course or in the subsequent instalments, then it can be adjusted in that respective financial year interest. 

The principal amount repaid can be deducted u/s 80C.