I booked a builder’s flat in my name in 2009. The payment was construction-linked and I am yet to get the possession. In 2012, we had to take a home loan to pay the remaining 25% amount. The loan was taken by my son, who is working. He is the main applicant and I am the co-applicant. He is repaying the loan through EMIs w.e.f. June 2012. Can he claim tax benefit under section 24(c) or any other section? Am I entitled to claim benefit, though I am not working at present?
—GK A borrower can get tax deduction benefit on home loan for under- construction property only from the financial year in which the construction is completed, irrespective of whether it is pre-EMI or EMI on part payment. The interest paid during construction period will be allowed in five equal installments beginning from the year in which the construction is completed and till possession. Any payment of principal during the year in which the property remains under- construction is lost forever.
As far as your son availing tax exemption is concerned, your son cannot claim any tax benefit as he is not the co-owner to the property. If you are also servicing the loan, you can claim tax benefits to the extent of your share in the loan. However, you will not be benefited unless you have taxable income. What is the position regarding TDS deduction in case of joint purchasers of an immovable property of more than R50 lakh? Do we need to pay for power backup, club membership and interest free maintenance service charge to the builder and will that be added to the cost of the property for which TDS is to be deducted?
— Rahul If the overall “consideration for transfer of immovable property” exceeds R50 lakh, then your TDS will be deducted irrespective of the number of joint purchasers.
All joint purchasers are required to get tax deducted separately on the amount of payment that pertains to them. This means that you will need to decide who owns what share in the property and the mode of payment of each person. Make this payment separately as it will also help while claiming deduction of the interest on home loan.
As far as club membership charge and interest free maintenance service charge is concerned, it can be argued that this is part of the “consideration for transfer of immovable property” (especially since they are included in the agreement). I would suggest you not to take a risk and deduct the tax. After all, the builder has to give you credit for the TDS and this is not an additional expense. My home loan was sanctioned from one bank on September 2012 but till now I have not given any request for disbursement. Recently, I have applied for home loan from another bank and it got sanctioned. Now I have asked the first bank to cancel the first home loan and refund the processing fee after deducting the standard charges. That bank, however, is telling me that the processing fee amount cannot be refunded. I want to know that if there is any provision for refund of processing fee from the bank after deducting some standard charges.
—S Biswas Processing fee is charged to get the loan application processed and is towards the cost of processing your loan application. This fee is nonrefundable in most cases. If you examine the loan application form, you will most probably find a line in bold print that says that the processing fee is non-refundable.
So getting a refund of processing fee from your bank (The one you mentioned does not give home loans) seems very unlikely in your case.