Home Loan interest Perquisites

[LAKSHMINARAYANAN TR]

Dear All,

My client works for a bank, availed home loan. Paying Interest and Principal through salary deductions. Being a bank employees get the benefit of interest at lower rate. Difference in interest benefit is included as perquisite value and added for computation of Total Income.

Can the interest amount calculated as perquisite and included in computing total Income can be claimed as deduction U/s 24 ? Kindly clarify. Pl give if you have any citation to this effect on this type of subject.

Let me illustrate by an example.

1. Interest paid on Home Loan - ₹ 50000.

2. Perquisite value of Interest on Home Loan - ₹ 35000.

Can we claim interest on self occupied House Property ₹ 85000 or ₹ 50000 only ?

Regards

T R Lakshmi Narayanan

Chennai . Mobile NO. 9962088881

[K.S.AIYAR & CO.]

While your query sounds very logical, I am afraid it will not be eligible for the benefit mentioned by you for following reason:

What is allowable under section 24(b) is ".......amount of interest payable on such capital." To my mind what is taxed as perquisite u/s 17(2)(iii)(c) can not be brought within the meaning of the above words. Further the 3rd proviso requires assesses to furnish a certificate from person to whom interest is payable and I am sure no bank will give this certificate since it has not received the amount of perquisite value as interest.

In common parlance word perquisite means -'a thing regarded as a special right or privilege enjoyed as a result of one's position'.

Had there been any such intention under law the same would have been incorporated u/s 24 or u/s 17(2)(iii)(c) about such eligibility.

AI Summary

Deductibility of home loan interest: employer taxed perquisite value is not allowable as a Section 24 interest deduction. The question is whether the perquisite value of concessional home loan interest included in salary can be deducted under Section 24(b). The reply states it cannot: Section 24(b) permits deduction of interest actually payable on capital, but the perquisite taxed under salary is not an interest payment to the lender, and the proviso requiring a certificate from the payee cannot be met because the bank has not received the perquisite amount as interest.