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CS Executive · Tax Laws and Practice · Income under the Head House Property

Mr. Imran Qureshi borrowed Rs. 20,00,000 in tax year 2024-25 to construct his self-occupied house, and construction was completed in 2026-27. Interest of Rs. 1,50,000 accrued for the period before completion. Under section 22(1)(c), how is this pre-construction interest deducted?

Pre-construction interest is deducted in five equal instalments, beginning with the tax year in which the house is completed and continuing for the four following tax years. Here that is Rs. 30,000 each year, subject to the overall cap in section 22(2).

  1. AEntirely in tax year 2026-27
  2. BIn five equal instalments starting from the tax year of completionCorrect
  3. CIn ten equal instalments from the tax year of borrowing
  4. DIn five equal instalments starting from the tax year of borrowing

Explanation

Interest for the period before the tax year of acquisition or construction is deducted in five equal instalments, for the year of completion and each of the four succeeding years. Here it is Rs. 30,000 per year. Starting from the borrowing year or claiming it at once is not provided.

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