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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Nature of Business

Under section 32(b)(i) of the Income-tax Act, 2025, interest on capital borrowed for acquiring an asset is excluded from the interest deduction for which period?

Interest on borrowings for acquiring an asset is excluded from deduction for the period from the date of borrowing until the asset is first put to use, whether or not it is capitalised in the books. Interest after that date is allowed.

  1. AFrom the date of borrowing until the date the asset is first put to useCorrect
  2. BOnly the first year after the loan is taken
  3. CFrom the date the asset is first put to use until repayment
  4. DThe whole life of the loan

Explanation

Section 32(b)(i) excludes interest on capital borrowed for acquisition of an asset for the period from the date the capital was borrowed until the date the asset was first put to use, whether or not it is capitalised in the books. Interest after the asset is put to use is allowable.

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