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Tax benefit on home loan
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Apart from the deduction of interest on housing loans, the Income Tax Act also permits some deduction to assesses. Under the Act, a deduction is allowed on contributions made for specified purposes. A percentage of the total contribution made is allowed as a deduction.
The deduction is allowed only to individuals and Hindu Undivided Families. Other categories of assesses are entitled to this benefit. The rebate is for payments made for purchase or construction of a house. (The income from which is chargeable to tax under the head income from house property’) is eligible for the deduction.
Here are some payments that qualify for deduction.
Finance schemes :
Any installment or part payment of an amount due under any self-financing scheme, or any scheme of any development authority, housing board or any other authority which is engaged in the construction and sale of houses on ownership basis.
Amount paid to society any installment or part payment of an amount due to any company of which the assessed is shareholder, or to any co-operative society of which the assessed is a member, to wards the cost of a house allotted to him. Payment to government Re-payment of an amount borrowed from the Central or State Government, a bank, life Insurance Corporation, or any public company formed and registered in India with the main business of finance for houses. The amount allowed for deduction includes stamp duty, registration fee and other expenses for the purpose of transfer of the houses to the assessee.
Payments not eligible for this rebate:
Any amount paid by a shareholder of a company or a member of a co-operative society, to become a shareholder or member, towards admission fee, cost of shares or initial deposit amount spent on any additions, alterations, renovations or repairs, which are carried out after the house or any part of it has either been occupied by the assessee or any other person on his behalf, or has been let-out. In case the assessee transfers the house before the expiry of five years from the end of the financial year in which possession is obtained by him, no deduction will be allowed. Further, the aggregate amount of the deductions allowed in the prior years will be deemed to be tax payable by the assessee in the relevant previous year.[TOI]
The deduction is allowed only to individuals and Hindu Undivided Families. Other categories of assesses are entitled to this benefit. The rebate is for payments made for purchase or construction of a house. (The income from which is chargeable to tax under the head income from house property’) is eligible for the deduction.
Here are some payments that qualify for deduction.
Finance schemes :
Any installment or part payment of an amount due under any self-financing scheme, or any scheme of any development authority, housing board or any other authority which is engaged in the construction and sale of houses on ownership basis.
Amount paid to society any installment or part payment of an amount due to any company of which the assessed is shareholder, or to any co-operative society of which the assessed is a member, to wards the cost of a house allotted to him. Payment to government Re-payment of an amount borrowed from the Central or State Government, a bank, life Insurance Corporation, or any public company formed and registered in India with the main business of finance for houses. The amount allowed for deduction includes stamp duty, registration fee and other expenses for the purpose of transfer of the houses to the assessee.
Payments not eligible for this rebate:
Any amount paid by a shareholder of a company or a member of a co-operative society, to become a shareholder or member, towards admission fee, cost of shares or initial deposit amount spent on any additions, alterations, renovations or repairs, which are carried out after the house or any part of it has either been occupied by the assessee or any other person on his behalf, or has been let-out. In case the assessee transfers the house before the expiry of five years from the end of the financial year in which possession is obtained by him, no deduction will be allowed. Further, the aggregate amount of the deductions allowed in the prior years will be deemed to be tax payable by the assessee in the relevant previous year.[TOI]
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