Tax Benefit on Home Loan Interest: Section 24 - 3 years construction period clarification

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  1. Sandeep Shah

    Sandeep Shah New Member

    Dear Sir\Madam,

    I had sanctioned a home loan from SBI in December, 2011 for the property in Thane. However first installment was disbursed by bank in January, 2013 only (after again doing administrative sanction). I am yet to receive a possession on my property.

    To avail a tax benefit on home loan interest according to section 24, My question is how should I calculate 3 years? 3 financial years starts from Sanction Date or First Installment Disbursement date by bank.

    Can I still claim IT exemption up to Rs. 2,00,000/- if I receive a possession in financial year 2015-16.

    Regards,
     
  2. rudrabose

    rudrabose Active Member

    3 years would be considered from the date of agreement of purchase of property.

    The date of availing bank loan is irrelevant.
     
  3. Sandeep Shah

    Sandeep Shah New Member

    Hi Rudra,

    As per the income tax act it starts calculation from the end of the financial year in which capital was borrowed.

    In that context to calculate 3 financial year, should we use loan sanction date or first disbursement date? Its definitely not an agreement date.

    that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed 26[within three years from the end of the financial year in which capital was borrowed], the amount of deduction under this clause shall not exceed 26a[one lakh fifty thousand rupees].
     
    DEBASIS JANA likes this.
  4. DEBASIS JANA

    DEBASIS JANA New Member

    I too am seeking a clarification inthis regard. In my case an additional complication is that the loan amount is disbursed in two instalments in two consecutive financial years. Three year period is to be reckoned from the disbursal of second and final instalment or the first instalment?
     
  5. sanjeevsingla

    sanjeevsingla New Member

    I hv the same question, whether any clarification given by IT dept.
     
  6. gaurav_kumar

    gaurav_kumar Well-Known Member

    As per the Income Tax Act, to claim deduction under Section 24 for Interest on Loan, the property should be completed within 3 years from the end of the financial year in which the loan was taken
     
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