Prajna Capital - An Investment Guide

Very often taxpayers take loans either for the purpose of buying a house or a flat or a car or for some other personal purposes. They are required to pay equated monthly instalments ( EMI ) of interest and principal. In some cases both the interest and principal are deductible for purposes of income tax and in some cases it is not so deductible. Hence in this article we have discussed the benefits of EMI under the Income Tax Act mainly in relation to home loans. The section in this article pertains to the Income Tax Act, 1961. House should be ready for occupation: One of the most important aspects to be remembered by a taxpayer is that the house or flat must be complete. If the house is not ready or is still under construction, then no deduction either on principal or interest would be allowable and permissible under the Income Tax Act. Bifurcate EMI into Interest and Loan: The next important aspect to be remembered by a tax payer is to bifurcate EMI into two parts . They are (i) Inte...