Pre EMI for tax exemption

POSTED BY akila mahesh ON March 5, 2013 4:10 pm COMMENTS (9)

Hi Manish,

Myself, Akila. We have come across so much of your articles in JagoInvestor.

would like to have your thoughts on the below –

Suppose we take a loan for our apt which is under construction and would take atleast 2 yrs to complete. We know that the pre-EMI which we are paying cannot be accounted for tax computation immediately.

We have come across somewhere in the website that the amount paid towards pre-EMI can be claimed for tax after we occupy the property and it can be claimed within 5 years.

I wanted to know your opinion whether this is still followed and i can claim my pre-EMI payments for tax after occupying my home.

Thanks,

Akila.

9 replies on this article “Pre EMI for tax exemption”

  1. Dear Sushant, Please check the below link from the offcial site –

    http://law.incometaxindia.gov.in/dittaxmann/incometaxacts/2008itact/section80c.htm

    There please read the point xviii which is dealing with home loan principal repayment benefit.

    Read it for your own good & for all of us & update with your learnings. It’s just a request from my side to you not an Order. 🙂 🙂

    Thnaks

    Ashal

  2. akila mahesh says:

    Thanks for all of you. My spl thanks to ashal.

  3. Sushant K says:

    Hi Ashal,

    Sorry for pasting the jagoinvestor forum links itself on the last post. It was a mistake.

    I have tried to understand the act, but frankly I am not able to clearly conclude. However, few links where I have found that says principal can not be claimed before possession are
    1. http://blog.tibs.in/2010/03/23/property-under-construction-tax-benefit-from-principal-repayment/

    2.http://way2loan.in/homeloan/home_lona_tax_benefits#constructed

    Link 1 also explains why it is not exempted. I understand that company’s HR may be wrong…

    Regards,
    Sushant

  4. Dear Sushant, please read the IT act yourself. The wording is very much clear for section 80C as well as section 24(b). If your HR people are wrongly interpreting the same, well what can I do?

    Thanks

    Ashal

  5. Sushant K says:

    Hi Akila,

    The tax benifits ( both principal part and interest part) can be availed only in the year of possession and years thereafter.

    Dear Ashal,

    I think the information that principal under 80C can be claimed even for the years before possession is not correct.

    Please check the following links
    “http://localhost/jagoforum2/pre_emi-for-tax-exemption/7002/#comment-24302”.
    It also has pointer the IT act actual document.

    I too had the same impression as you for principal part earlier, but my company’s HR too clarified against it.

    Regards,
    Sushant

  6. Credexpert says:

    Dear Akila,

    Yes, you would be able to claim the tax benefits on the pre-EMI equally over the next five years only after the possession of house.

    Regards,
    Credexpert

  7. Dear Akila, the interest benefit ‘ll start only after possession but in case you are paying principal now, the same ‘ll be available even today under section 80C.

    Thanks

    Ashal

  8. akila mahesh says:

    @ ashal – Thanks. So we can claim after we occupy only rite?

  9. Dear Akilla, whatever you have stated is true but there is catch, the total interest benefit for your self occupied property is limited to 1.5L Rs. in a FY, so in case your actual interest in those future FY is already 1.5L Rs. or more than it, your tax benefit ‘ll be limited to the limit of 1.5L Rs.

    thanks

    Ashal

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