Investment World
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Income Tax
Interest on housing loan
THE Finance Act 2001, with effect from April 1, 2002 provided that where property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the interest on such borrowed capital shall be allowed as a deduction from the income chargeable under the head, `Income from House property'. If the property is self-occupied, the deduction is limited to Rs 30,000.
It was also provided that where the self-acquired property was acquired or constructed with capital borrowed on or after April 1, 1999 and such acquisition or construction is completed before April 1, 2003, the amount of deduction shall not exceed Rs 1,50,000. An amendment has been proposed in this provision relaxing the condition of the deduction. It now provides that the deduction of Rs1,50,000 would be allowed if the capital is borrowed on or after April 1,1999 and such purchase or construction is completed within three years from the end of the financial year in which the capital is borrowed.
The deduction will be allowed only if the following aspects are satisfied:
The assessee furnishes a certificate from the person to whom any interest is payable on the capital borrowed.
The certificate must specify the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property or;
The amount of interest payable for conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.
T. Banusekar
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