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R K Rao
30-01-2011, 10:30 PM
Hello Seniors and Friends,

A person has booked a flat under construction (Mass scale construction consisting of let's say 30-40 towers). The cost is around 60 lakhs as of now and he is required to pay in instalments of (let's say) 9L, 10L, 15 L and then the balance with a gap of around 6 months between each payment. The first payment of 9L has been made in Nov10 and the next is due in Feb 11. The first one was paid out of own savings.

He now plans to borrow around 10 Lakhs from a relative of his (with an intention to repay the same AFTER TAKING OVER THE FLAT which could be after an year or so).

Now my question is -

Had he availed the same amount as loan from any financial institutions and started repaying the money, he could have claimed rebate on income tax for the principal and interest paid by him (rebate meaning deductions etc). But here he DOES NOT repay NOW. So, can he claim deduction for the CURRENT FINANCIAL YEAR ? ( My contention is - since he has not repaid any thing, he can not claim deductions).

A supplementary question -

If he borrows the amount from any financial institution - will the repayment Start Now or after taking possession of the flat? If repayment starts after taking over, then can he claim deduction now( If yes, How?).

Thanks to all esteemed seniors and Friends

RK

SASI
31-01-2011, 06:24 AM
Interest rebate on housing loan is calculated on accrual basis. Rebate is on the interest payable. There is no condition that rebate can be claimed only in cases where repayment has been started.

Nature of the repayment depends on the individual/ institution from whom loan is taken. Interest rebate has no connection with repayment.

SASI

R K Rao
31-01-2011, 07:48 PM
Mr Sasi,

Thank you very much.

prasannakumar
17-02-2011, 07:47 PM
Interest rebate on housing loan is calculated on accrual basis. Rebate is on the interest payable. There is no condition that rebate can be claimed only in cases where repayment has been started.

Nature of the repayment depends on the individual/ institution from whom loan is taken. Interest rebate has no connection with repayment.

SASI

Sir,
Whether such clause is admissible for Educational loan borrowed from from financial institutions

Regards
Prasanna Kumar