No interest on home loan this FY

chasing the new asset within one year before the date of transfer or which is not utilised for the purchase or construction of the new asset before the due date of furnishing the return of income for the relevant assessment year, has to be deposited before the due date for furnishing the return of income, in any bank or an institution in a specified account known as “Capital Gains Account Scheme”.

The amount so invested may be drawn for the purpose of purchase or construction of the new asset within the specified time. I purchased a house in July 2013 by taking a loan. However, I will receive the possession of the house in September 2014? I want to know whether the interest benefit will be available for the FY 201314.

Suresh M.

You will not be entitled to claim interest on housing loan for the FY 2013-14.

This is because section 24 (1) (VI) of the Income-Tax Act says: “Where the property has been acquired or constructed with borrowed capital, interest, or constructed, as reduced by any part thereof allowed as a deduction under any other provision of this Act, shall be deducted under this clause in five equal annual installments, commencing the previous year the house was acquired or constructed.”

So, the interest for FY13-14 will be deductible in five installments beginning with FY 2014-15.

(Kamal Rathi is a Hyderabad-based CA and can be contacted at kamalrathi.ca@gmail. com)