CA Sandeep Kanoi

CA Sandeep KanoiFor me a Home is a safe place where I can have the things and people I love at one place. It’s a place where I dream, sing, and rest from the stress outside. Its refuge from our busy lives and connect us with the people who love us the most. Buying our own home is like a dream come true for  most of us. Those who do not have there own have the dream to own a house at there own. But do you know that buying an house can also provides you tax benefits Under section 80C of the Income Tax Act,1961? In this article we are discussing the Qualifying Amount, conditions, Limits subject to which we are eligible for deduction U/s. 80C for Investment in Residential House Property.

DEDUCTIONS UNDER SECTION 80C IN RELATION TO INVESTMENT IN NEW RESIDENTIAL HOUSE PROPERTY

ID-100140366Deduction under section 80C of the Income tax Act is available for investment in house property subject to the satisfaction of the conditions of that section in regard to qualifying amounts in the following circumstances to the individuals/Hindu undivided families.

Payments made towards the cost of purchase/construction of new residential house property during the previous year are eligible for deduction under section 80C. The following payments qualify for deduction:-

a. any installment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

b. any installment or part payment of the amount due to any company or cooperative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him (it is not applicable if the assessee is not a shareholder or member of the company/cooperative society which provided house to the assessee); or

c. repayment of the amount borrowed by the assessee from‑

i. the Central Government or any State Government, or

ii. any bank, including a cooperative bank, or

iii. the Life Insurance Corporation of India, or

iv. the National Housing Bank, or

v. any public company formed and registered in India with the main object of carrying on the business of providing long term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under section 36(1) (viii), or

vi. any company in which the public are substantially interest or any cooperative society, where such company or cooperative society is engaged in the business of financing the construction of houses, or

vii. the assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

viii. the assessee’s employer where such employer is a public company or public sector company, or a university established by law or a college affiliated to such university or a local authority or a cooperative society;

d. stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee.

The following payments are not qualified for the purpose of section 80C :

a. the admission fee, cost of the share and initial deposit which a shareholder of a company or a member of a cooperative society has to pay for becoming such shareholder or member; or

b. the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property (or any part thereof) has either been occupied by the assessee or any other person on his behalf or been let out; or
c. any expenditure in respect of which deduction is allowable under the provisions of section 24.
Qualifying Limit

Section 80C provides that in computing the total income of an assessee, deduction shall be provided in respect of various payments/investments made as included in the aforesaid Section subject to a ceiling of Rs. 1 lakh (Increased to Rs. 1.50 Lakh from A.Y. 2015-16) on the aggregate amount of such payments/investments.

Time Period for Investment or When deduction can be revoked

Section 80C(5) stipulates that in case an assessee transfers the house property referred to above before the expiry of five years from the end of the financial year in which possession of such property is obtained by him, or receives back, whether by way of refund or otherwise, any sum specified above, then no deduction shall be allowed with reference to any of the sums referred to above and the aggregate amount of deductions of income already allowed in respect of the previous year or years shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

Image courtesy of Danilo Rizzuti at FreeDigitalPhotos.net

(Updated on 11.05.2016)

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Category : Income Tax (20860)
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  • Sheetal

    Is the Service tax paid to builder for an under construction property, claimable for income tax deductions. Possession is in next year financial year.

  • Shipreeta Verma

    I had booked a flat with an initial deposit of Rs. 30,000 (self financing) in November 2015,this amount is a part of the total price of the house, the registration for the house would however e done in April 2016. Can I claim a tax rebate for this Rs. 30,000 under 80C for the year 2015-’16

  • Vinothkumar

    I purchased housing land by getting personal loan from bank, is this eligible for deduction? Pls clarify?