I am planning to purchase Kisan Vikas Patra. What are the tax benefits under Section 80 in relation to KVP?
Section 80C allows for deduction of up to Rs 1.5 lakh for investment made in specified instruments. However, no deduction is allowed under the said section for investment made in Kisan Vikas Patra. Further, the interest earned on KVP is also taxable. Alternatively, you can invest in National Savings Certificate, Public Provident Fund, equity linked savings scheme, 5-year term deposit with a scheduled bank, etc., which are eligible for deduction under Section 80C.
In 2012, I took a bank loan to construct a house. I have been paying the interest on the loan since then. The construction was completed in March 2016. How can I claim deduction of interest paid on this loan?
All the interest amount paid from the period beginning 2012 and ending on the year prior to which construction of the house was completed will be termed as pre-construction interest. This pre-construction period interest is deductible in five equal installments starting from the year in which construction of property is complete, i.e., FY 2015-16. The balance amount can be deducted in subsequent four years. Also note that if the house is a self-occupied property, the interest deduction will be limited to Rs 30,000 as the construction has taken a period of more than three years.
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You are also required to obtain an interest certificate from the person from which the loan is borrowed. On the other hand, if the property is let out, there is no upper limit on the interest that can be claimed.
The writer is founder of RSM Astute Consulting Group
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