Pre-EMI or Full EMI – house under construction-income tax angle

Posted on by Venkata Ramani

As per income tax law, the interest paid during construction phase can be allowed in five equal instalments beginning from the year in which the construction is completed and completion certificate is given. So any interest paid as part of Pre-EMI or full EMI is not tax deductible during the construction phase. Once we get possession certificate, the interest component of the Pre-EMI or Full EMI is aggregated and deduction is allowed in five equal instalments beginning from the year in which the construction is completed.

For example, if the total interest was 100000 during the construction phase, we can get deduction of Rs.20,000/year for first 5 years from the date of final disbursement.However, principal amount paid as part of full EMI during the construction phase is not tax deductible.

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I am a Cost Accountant having worked in finance for 32 years in Coal India Ltd, I opted for VRS in 2007. After this, I worked for Dun & BradStreet for an world bank assignment concerning pricing and profitability of bank products. In this connection, I visited I&M bank, Kenya, Africa. I worked as Sr.Cost consultant with Jasmin Infotech, a good growing embedded software company in Chennai. Bharathiya nari is my additional site manned by my wife Mrs. Nirmala Ramani who is basically a medical transcript, ex.convent teacher .She writes the articles covering cooking, culture, tourism etc. To see my articles in finance, readers can visit ramadvice.wordpress.com. My son CV Ram is the main fulcrum of the site.