I took a loan of rs.10 lac in march 2010 and gave advance payment to buy a house. I took this loan from a freind @12% per annum. I did not pay any interest to him till date. Now i want to pay him the interest with the principal amount. Can i take tax benifit on this. I got my property registered in june 2010. And what are the supporting documents i need from the lender if any requierd.
1 Answers
Under section 24, interest payment to relatives and friends can be claimed. For this, an interest payment certificate is required from lender. This should states the amount of interest paid in the financial year and it should mention lender's name, signature and PAN card. The lender is liable to pay income tax on interest as taxable income here.
Principal repayment won't have any tax benefit here as its allowed only if loan is taken from notified institutions and banks.
Since i did not pay him the interest in fy 2010-2011 and did not claim any dedution in my return of fy 2010-2011 can i claim it in next financial year as i am paying him interest in 2011-2012 now. Please advice.
yes, you can claim interest paid in FY 2011-12.
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