Income tax exemption on home loan interest

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One can claim deduction towards interest paid for the advance construction period in 5 equal annual installments starting from the year of possession or acquisition. This one-fifth amount needs to be added with the interest paid during the year and the total should be reflected as interest payable on borrowed capital in the house property schedule. In cases where there is still a loss to be carried forward after applying the set-off provisions, it should be disclosed in the carry forward loss schedule. One should evaluate all factors such as return on investment, periodicity of return, and lock-in period before choosing the investment option that best suits her needs and objectives. Tax saving alone cannot be the deciding factor.

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