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


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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