Deduction for interest and pricipal repayment on home loan

[Bijay Shrestha]

Dear Friends,

Three co-owners (also co-applicants) took home loan (share of each co-owner may or may not be there) but entire EMI was paid only by one Co-owner from his own account. Now

1. Can all co-owners claim Interest & Principal Repayment deduction individually subject the limit provided in IT Act, in their IT Return? .

2. Can only paying co-owner claim deduction ? if yes, he can claim full deduction or only to the extent of his share?

3. What happens in above situations if EMI is paid from Joint accounts but funded by only One Co-owner?

Please suggest.

(Plain reading of Section 24 says that deduction shall be allowed for interest payable on capital borrowed. It does not talk about actual payment and who actually paid.)

Also suggest case law if any.

[DR.MARIAPPAN GOVINDARAJAN]

In my view if the home loan is jointly taken they are entitled interest deduction proportionate to their participation. No one person can claim the entire benefit. The source of recovery of the amount is not relevant.

[Bijay Shrestha]

I am also of the same view sir.

But if only paying co-owner wants to claim full deduction and not other co-owners, whether he can do so ?

[Ganeshan Kalyani]

In my view a declaration is needed to be filed.

[Ganeshan Kalyani]

In such cases declaration is needed wherein it is essential to declare that the interest credit shall be availed by a particular person only . Thanks .

AI Summary

Deduction for home loan interest: co owners typically claim proportionate shares; declaration can allocate full benefit. Where a home loan is jointly taken, each co owner is entitled to claim interest and principal repayment deductions proportionate to their participation; the source of EMI payment is irrelevant to entitlement. A contemporaneous declaration allocating the deduction to a particular co owner is the practical mechanism to permit one person to claim the benefit in full.