Getting home loan exemption for private loan

[Srinivas P]

Dear Sir,

  I'm working in an IT company and paying tax of Rs. 1,60,000 p.a.  Recently, I purchased a flat and partly paid from my salary savings and from private loan. In this transaction, as no bank was involved in getting home loan, I'm confused of getting tax exemption under home loan for my private loan. The flat is still under construction.

 Request you to provide me the way, how I can get exemption in IT for my private loan

Thanks in Advance.

Regards

Srinivas. P.

[tarsem gupta]

Interest paid on loan, including private loan, is deductible u/s 24 from the income from the house property. As the house is still under construction no deduction is allowable. On completion of the house deduction of interest isw allowable as per rules. No deduction of repayment of loan is allowed on private loan. 

[mohammed koya ahamed]

repayment of interest on borrowed capital is an allowable u/s.24(1)(b) of the Income Tax Act, only one condition is there. Loan will be used for construction/ready made purchase of self occupied property as per Sec.23 of Income Tax Act,1961. Another thing is the repayment will be allowed u/s.80C of IT Act  if the loan is granted by a public sector company/ authority constituted by central or state government  in providing long term finance.But there is no such restriction in the act  for  deduction on payment of interest u/s 24(1)

AI Summary

Home loan interest deduction applies to private loans for property once construction completes, subject to section 24 conditions. Interest on borrowed capital used to construct or acquire a self-occupied house is deductible from house property income, but no interest deduction is allowable while the property is under construction; interest deduction becomes allowable after completion. Repayment of principal on a private loan is not deductible, except that a repayment-related deduction is available only where the loan is granted by a public sector company or a government authority providing long-term finance.