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Interest on Housing loan shall be restricted to Rs. 30,000/- if construction not completed within 3 years


Chartered Accountant

Interest on Housing loan shall be restricted to Rs. 30,000/- if construction not completed within 3 years
Query 1]
I am an employee in a PSU residing at Bilaspur. I have a house property in Bhilai which I am unable to occupy because of my service in Bilaspur. I had taken a house building loan for the construction of this house from my company in Jan 2010.The construction of this house has been completed this year  in March 2015.The Interest that has been deducted from my salary till now are as follows –
F.Y.                             A.Y.                Amount
2010–11                    2011-12        17,024/-
2011-12                     2012-13        35,196/-
2012–13                    2013-14        46,536/-
2013-14                     2014-15        44,906/-
2014-15                     2015-16        42,506/-
The Interest from the F.Y. 2010-11 to 2013-14 i.e., (17,024+35,196+46,536+44,906) = Rs. 1,43,662/- is the preconstruction period interest. And, the interest for the F.Y. 2014-15 is of Rs. 42,506/- becomes the post construction period interest.
My query is –
  1. I want to show the house as Self Occupied due to which the Interest (Pre-constr.= 1,43,662/5=28732/-+ Post–constr. -42506/-) Rs. 71,238/- would  become a loss. So, which ITR should I file?
  2. Whether my following tax calculation is right:
    Gross Salary                                                                       Rs. 7,58,145/-
Less: Sec 80C -Rs. 207353/-but limited to                  Rs. 1,50,000/-
                        : Sec 80G                                                                  Rs. 751/-
Net Salary                                                                           Rs. 607394/-
Less: Loss from HP                                                           Rs. (71238/-)
Total Income                                                                      Rs. 5,36,156/-

Tax on above                                                                       Rs. 32231/-
Education Cess                                                      Rs. 967/-
Tax Payable                                                                        Rs. 33198/-
TDS as per Form No. 16                                      Rs. 47880/-
Refund due                                                                         Rs. 14682/-
I have never claimed the interest portion in my previous ITRs.


1.      It appears that you have income from salary & loss from one house property only. You might have certain amount of income by way of interest from SB A/c or FDR. You can file the return in simple & Sahaj ITR-I.

2.      It’s always pleasure to see the interest & knowledge of salaried taxpayer in the income tax law. But, there are finer points in the Income Tax Act which taxpayer needs to understand carefully before filing their tax return. One such point is with regard to deductibility of interest on loan borrowed for acquisition or construction of the house property. In normal course, interest on housing loan is eligible for deduction u/s 24(b) up to a maximum of Rs. 2 Lacs p.a (Rs. 1.50 Lacs up to AY 2014-15). However, it may cautiously be noted that there is a ceiling of Rs. 30,000/- if the acquisition or construction is not completed within a period of 3 years from the end of the financial year in which loan is taken in respect of a house which (a) is in occupation of the owner for his own residence or (b) cannot be occupied by the owner by reason of the fact that owing to his employment, business carried out at any place, he has to reside at that other place in a building not belonging to him. In your case, as your house construction is not completed by 31st March 2014, deduction towards interest on housing loan would be restricted to Rs. 30,000/- as against Rs. 71,238/- considered by you.

3.      In your computation you may further add interest income, if any. It may be noted that interest on SB A/c is eligible for deduction under section 80TTA up to a maximum of Rs. 10,000/-
Query 2]
I have till date not filed IT return. I wish to file IT return for FY 2014-15 & for FY 2013-14. My income sources are tuition classes at home, FD interest, Income from capital market. Can I use form ITR-4 Sugam and ITR-V for respective years? Please suggest correct forms. Rasika]
1.      Individual with business income may have the option to file the return in ITR-4 or 4S.

2.      ITR-4S is comparatively simpler forms to fill. But, ITR-4S could not be filed in case of an individuals with business income if they have
i. Income from more than one house property
ii. Income from lottery or race horses
iii. Capital gain income
iv. Agriculture/exempt income in excess of Rs. 5,000/-
v. Speculative income or special nature income
vi. Income from Profession
vii. Commission Income
viii. Agency business income
ix. Assets (including financial interest in any entity) located outside India; or
x. Signing authority in any account located outside India.

3.      Individual with above ten categories of income has to file return in ITR-4. Since you were having capital gain income from capital market, option to file return in ITR-4S is not available. You have to file the return in ITR-4 only.
Query 3]
I have a query regarding TDS. I have joined a Pvt. Ltd. co. in Dec- 2014 at Nagpur. My employer has deducted TDS (approx. 5000/- p/m) and didn’t deposit it yet. Now, he told me to take back the amount of TDS and deposit tax on my own while filing return? Can this be done? Will there be any penalty for me?  From April-2014 to Nov- 2014, TDS was deducted and deposited by my previous employer. Kindly remove my confusion.
You can ultimately pay the tax by accepting the amount from your employer. Except additional liability towards interest u/s 234B & 234C, no other penal consequences would be there on you for delay in payment of tax. Further, interest would also be payable u/s 234A if you don’t file the return of income before 31st August (i.e., the due date of filing income tax return).
Query 4]
On whom the tax liability will come for earned interest  in a Joint Saving Bank account (E or S), on 1st holder or 2nd holder? Please Reply. []
In case of joint bank account, interest received would be taxable in the hands of the beneficial owner of the account. In case, both are beneficial owner of the account, the interest amount may be divided amongst both the account holder in logical proportion.
[The author is a practicing Chartered Accountant from Nagpur.
Readers may send their direct tax related queries at
10, Laxmi Vyankatesh Apartment
C.A. Road, Telephone Exch. Square
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