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Repayment of loan to purchase land eligible u/s 80-C?

Can I get deduction under Sec. 80C for repayment of loan taken for purchase of land?

Sec. 80C(2)(xviii) permits deduction for repayment of loan for purchase or construction of a residential house property, which is chargeable to tax under the head "Income from house property".

All that it means is that the loan for house purchased or constructed should be for a residential house property and that such residential house should have been completed. Any repayment of such cost including repayment of loan for plot will qualify for deduction.

Items barred for deduction in the clause do not include repayment of loan for purchase of land.

Board Circular No. 498 dated November 4, 1987 on Sec. 80C, which is now restored, requires that construction of a house property should be completed before the claim can be allowed.

Board Circular No. 667 dated October 18, 1993, in the context of reinvestment benefit for abatement of capital gains for similar purchase or construction of a residential house property under Sec. 54, has conceded that the cost of the plot can also be included as part of construction cost of such residential house.

It has been stated that the cost of the land is an integral part of the cost of the residential house, whether purchased or built. The same reasoning should apply for benefit of Sec. 80C as well.

S. RAJARATNAM

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