Income tax exemption for an under-construction house/flat

POSTED BY Harsha ON January 4, 2011 2:41 pm ONE COMMENT

Dear Sir,

I booked a flat for around 19 lakhs, in last year April (2010). I had applied and got home loan sanctioned from SBI. I chose to start the EMIs right away. The EMIs(full EMI, not pre-EMI) started in June 2010. Till now I have paid around 8 full EMIs. Total of around Rs 20,000 as principal and Rs.50,000 as interest till now.
The construction was supposed to be completed by Jan, 2011. But because of some labour problems for builder, he’s now telling that he’ll give in March 2011. And FYI, we have done agreement for sale in April 2010 and I had paid around 18,800 as registration & stamp duty of Agreement.

Now I have some questions regarding tax benefits:
1. As the flat is still under construction, can I get tax benefits for pricipal payment(20K) and registration of agreement for sale (18.8K) under section 80C? I know its not possible in case of interest payment unless I do sale deed, registration and get occupation certificate of flat from builder.
2. He’s telling that he’ll give it in March 2011. What if it gets delayed and doesn’t happen in this financial year (2010-11)? Can I anticipate and give a probable date for income tax computation in my company, as they are asking for IT proofs for form-16 preparation…
3. Please confirm whether I can get tax benefits for principal and registration charges (together around 39K)…
4. If I do sale deed and registration in this financial year and if it doesn’t get reflected in form-16, can I later declare the interest portion in IT returns? is it possible?

FYI, I’am yet to get the possession.

Your timely response will be greatly appreciated.


One reply on this article “Income tax exemption for an under-construction house/flat”

  1. Gaurav says:

    1. You can get tax benefit under section 80C for amount paid toward Stamp Duty and Registration.

    2. If possession doesn’t happen this year, I don’t think you can get tax benefit for principal+interest . Also I don’t think your company will agree for any probable dates

    3. If Stamp duty+Registration is done,you can get tax benefit as said in 1 above.

    4. Even if not declared in Form 16, you can claim any benefits at the time of filing income tax returns.

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