Income tax: Deduction for interest on joint home loan is Rs 2 lakh per person

Updated: April 3, 2017 4:38:44 AM

The deduction for interest on home loan is `2 lakh for each individual borrower of a joint loan.

interest payment, tax deduction, home loan, interest on home loan, ICICI Pension Plan, policy, Section 80CCC, TDS, Income Tax Act The deduction for interest on home loan is `2 lakh for each individual borrower of a joint loan.

i. Me and my wife had taken a joint home loan and our interest payment is `2.3 lakh a year. Can both of us claim tax deduction of up to `2 lakh each?
– Arvind Gaur

ii. The deduction for interest on home loan is `2 lakh for each individual borrower of a joint loan. Accordingly, assuming that both you and your wife are joint owners of the property, each of you may claim a deduction up to `2 lakh, limited to each of your share of contribution towards the interest.

iii. I had a ICICI Pension Plan for which I paid `2,000 every month for 10 years but never took tax benefit under Section 80C. Now I want to surrender prematurely the policy. My cost is around `2 lakh and I would gain around `1.57 lakh. For how much amount do I have to pay tax?
– Prakash Kumar

iv. In case deduction was allowed earlier under Section 80CCC, upon surrender of pension plan, amount standing to the individual’s credit in the fund, along with interest or bonus, will be taxable in that year. However, no deduction has been claimed here. Hence, several aspects are to be conside-red to determine taxability of amount received on surrender of pension fund. If the amount received is in commutation of pension, then such commuted value received would be exempt under Section 10(10A)(iii). If the amount is received as a lump-sum, then it would be taxable as income from other sources or as capital gains depending on the terms of the plan.

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v. If my turnover does not exceed Rs 1 crore and I audit my accounts, is TDS deduction compulsory?
– Subash Sharma

vi. There are certain provisions under the Income Tax Act (like Section 194H and 194I) which require an individual to deduct tax at source only if his total turnover/ gross receipts/ sales from business or profession exceeds `1 crore (in case of business) or `25 lakh (in case of profession). Hence, although your accounts are audited, as your turnover does not exceed `1 crore, you would not be mandatorily required deduct tax.

The writer is tax partner & India mobility leader, EY India. Send your queries to

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