Tax deduction on Home Loan from Disbursal or Registration?

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  1. Chintan Jani

    Chintan Jani New Member

    How is the pre EMI interest differentiated from the actual EMI interest in context of below case.

    1) Loan amount for property is disbursed in Oct'14

    2) Sale deed for the property is expected in Jan'15

    3) Individual has instructed the bank for preponing the EMI deduction i.e from Dec'14

    Moreover, under the Section 24 provision , how is construction completion of property defined?

    Construction completion = Sale deed execution ?
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    1. At the time of completion of construction - a Completion Certificate is issued.
    2. The Deduction for Interest under Section 24 is allowed on an accrual basis. As the loan was disbursed in Oct 14, interest from Oct onwards would be considered irrespective of the payment of EMI's
  3. Chintan Jani

    Chintan Jani New Member

    Thanks. What if the completion certificate is issued after the 1st EMI deduction? Will the interest proportion of 1st EMI be considered as pre-EMI interest ?
  4. gaurav_kumar

    gaurav_kumar Well-Known Member

    The completion is to be considered on an yearly basis and not on a monthly basis.

    If the construction is completed in any month during any financial year, the interest for that whole year would be considered as current interest and would be allowed to be claimed in the same year.

    However, the interest for the years prior to the year in which the construction is completed would be considered as pre-construction interest.
    Gaurang Agarwal and Chintan Jani like this.
  5. Chintan Jani

    Chintan Jani New Member

    That was really helpful..Thanks a lot.
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