I’ve taken a house mortgage from a housing finance firm for getting a residential property for self-occupation. For making the down cost, I’ve borrowed cash from my mother and father to whom I’m paying curiosity. What certificates would I want to indicate to my firm in order that they take into account curiosity cost to my mother and father eligible for deduction u/s 24. Can I declare deduction for principal compensation u/s 80C on cash being repaid to my mother and father? What can I do if my firm doesn’t take into account this whereas deducting TDS?
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Reply by: Balwant Jain, a tax skilled
Deduction below Part 24(b) of the Earnings Tax Act, could be claimed in respect of curiosity paid on any cash borrowed for buy, development, renovation or restore of your own home property. The cash could be borrowed from any individual together with your mother and father in contrast to Part 80 C which particularly gives that deduction for compensation of residence mortgage can be out there provided that the cash is borrowed from specified establishments. So that you won’t be able to say any deduction below Part 80 C in respect of the compensation of cash borrowed out of your mother and father. Please word that deduction below Part 24(b) is offered in respect all varieties of properties whereas the deduction below 80C is offered in respect of solely residential property.
The revenue tax legal guidelines don’t present for any particular format for the certificates to be obtained from the lender. Nonetheless, the certificates ought to clearly point out the quantity borrowed, curiosity for the interval and ideally the small print of the property for which the cash was given. In case your employer doesn’t settle for this certificates, the one plan of action out there to you is to say the identical whereas submitting your revenue tax return. You’ll be able to request your HR/finance division of your organization to refer the Part 24(b) property which doesn’t prohibit the deduction of curiosity if cash is borrowed from mother and father for the desired functions. The deduction in respect of curiosity is restricted to solely two lakhs rupees if the property is self-occupied. If the property is let loose full curiosity could be claimed however any loss below the home property head can solely be set off towards different revenue to the extent of two lakh rupees within the present yr and the loss not so set off could be carried ahead for set off towards home property revenue in eight subsequent years.
Please word that no deduction below Part 80C is offered below the brand new tax regime. Deduction below Part 24(b) for self-occupied property can be not out there below new tax regime. In case of let loose property no loss is allowed to be set off and carried ahead below the home property revenue below the brand new tax regime. So successfully for let loose property you may declare curiosity deduction below Part 24(b) solely to the extent of taxable hire of all of the let loose properties taken collectively below the brand new tax regime
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