Deduction u/s 24 of I. T. Act, 1961

[Vartik Choksi]

I have taken the loan from the bank to purchase the house. I am regular in making the payment of interest and principle to the bank. I also claim interest deduction u/s 24 of I. T. Act, 1961. Now if I borrow loan from wife and make the repayment of loan to the bank, whether I would be eligible to claim interest payable to my wife u/s 24 of I. T. Act, 1961?

[CAGOPALJI AGRAWAL]

Yes as per circular dated 20/8/1969 no. 28, once can claim the deduction of interest even on the loan taken to repay the original loan amount.

AI Summary

Interest Deduction Eligibility: Borrowing from Spouse to Repay Home Loan Covered Under Section 24 of Income Tax Act 1961 An individual inquired about the eligibility to claim an interest deduction under Section 24 of the Income Tax Act, 1961, after borrowing money from their spouse to repay a bank loan used for purchasing a house. A Chartered Accountant responded, referencing a circular from August 20, 1969, which allows the deduction of interest on a loan taken to repay the original loan amount.