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Payment of interest on housing loan

I understand that under Sec. 24(b), interest on housing loan paid for pre-construction period is deductible in five equal instalments. Is the same condition applicable in the case of deduction under Sec. 80C for instalments of loan paid during pre-construction period against principal amount?

Sec. 24 allows interest on borrowing in acquiring, constructing, repairing, renewing or reconstructing house property.

Since there is no income during the period of construction, the law allows deduction of interest paid before completion in five instalments starting from the year of completion.

The deduction under Sec. 24 in computation of property income has nothing to do with the incentive benefit, which was allowed by way of rebate under Sec. 88(2)(xv) on repayment of principal amount of the loan. Sec. 80C(2)(xviii) effective from assessment year 2006-07 now treats such repayment as part of Rs. 1 lakh allowed as a deduction from taxable income under Sec. 80C. Sec. 88 nor 80C cover only principal amount of loan and not interest.

S. Rajaratnam

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