Deduction u/s 24- Interest on Borrowed Capital
Deduction of interest on borrowed capital is allowed under
the head of house property with the maximum of Rs. 150,000 P.A. but in case of
self occupied property it is limited to Rs. 30,000 P.A.
Points to be noted down:
Allowed
Ø
Interest on preacquisition period are allowed
in 5 equal installments if deduction not available in any other provision of
act
Ø
Deduction of Interest are allowed on accrual
basis and it should be claimed on yearly basis
Ø
Deduction are available even if neither the
principal nor the interest are charge on property
Ø
Interest on fresh loan, taken to repay the
original loan raised for the aforesaid purpose is allowable as deduction
Not Allowed
Ø
Interest on unpaid interest not allowed-Interest
on interest are not allowed under this head
Ø
No deduction is allowed for any brokerage or
commission for arranging the loan
Note:
Preconstruction period means the period commencing on the
date of borrowing and ending on March 31st of immediately prior to
that date of completion of construction or date of acquisition or date of
repayment, whichever is earlier.
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