manik (ca in practice) (420 Points)
13 March 2011
a salaried person had taken a loan from his relatives to purchase a property and in return he is paying them interest @ rate of 8% does interest paid by him is allowable as a deduction from his total income while computing his tax , if yes ,then under which section?
CA SHRIPAL LUNIYA
(CA, CS Final & M.Com)
(744 Points)
Replied 13 March 2011
Devendra
(Chartered Accountant)
(4775 Points)
Replied 13 March 2011
I don't think so he can claim Interest on the loan. As the loan is received from a friend. The loan should be taken from a Bank or Financial Institution.
ajith
(Article)
(293 Points)
Replied 14 March 2011
Deductions from income from house property.
Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:-
(a) a sum equal to thirty per cent. of the annual value;
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:
Provided that in respect of property referred to in sub-section (2) of section 23; the amount of deduction shall not exceed thirty thousand rupees:
Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed within three years from the end of the financial year in which capital was borrowed, the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees
Explanation.- Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years.
The following third proviso and Explanation shall be inserted after the second proviso to section 24 by the Finance Act, 2002, w.e.f. 1-4-2003:
Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.
Explanation.-For the purposes of this proviso, the expression “new loan” means the whole or any part of a loan taken by the assessee subsequent to capital borrowed, for the purpose of repayment of such capital.
It is not mentioned the loan should be from any specific kind of person.
He just has to furnish a certificate regarding the details.
Bhav Bhuti Sharma
(Towards Professionalism )
(823 Points)
Replied 14 March 2011
| Originally posted by : ajith | ||
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Deductions from income from house property. Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:- (a) a sum equal to thirty per cent. of the annual value; (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital: Provided that in respect of property referred to in sub-section (2) of section 23; the amount of deduction shall not exceed thirty thousand rupees: Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed within three years from the end of the financial year in which capital was borrowed, the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees Explanation.- Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years. The following third proviso and Explanation shall be inserted after the second proviso to section 24 by the Finance Act, 2002, w.e.f. 1-4-2003: Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan. Explanation.-For the purposes of this proviso, the expression “new loan” means the whole or any part of a loan taken by the assessee subsequent to capital borrowed, for the purpose of repayment of such capital. It is not mentioned the loan should be from any specific kind of person. He just has to furnish a certificate regarding the details. |
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agree
md.tahir alam
(student)
(89 Points)
Replied 14 March 2011
yes he can claim deductions u/h house property u/s 24 (b)
Seema
(---)
(38 Points)
Replied 14 March 2011
I too agree that the deduction can be claimed u/s 24 (b)
SANJAY JOIL
(EMPLOYEE)
(28 Points)
Replied 14 March 2011
Ankit Jain
(Fresher)
(29 Points)
Replied 15 March 2011
Dear Manik
That person can very well claim deduction of interest actually paid by him under section 24(b) of IT Act 1961 though he've taken loan from his relative.
CA Ronak Jain
(practice)
(84 Points)
Replied 17 March 2011
Live class on PF & ESI Enrollment & Returns Filing(with recording)
CAclubindia
