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I have booked a flat in under construction project in Pune in 2012. I have taken loan for the same and the first disbursement was made on 17 Jan 2013. I have started paying Full EMI against this home loan from Feb 2013 onwards itself.

Builder has not yet provided final possession but has sent mail for "Possession for Furniture work". We have to pay final 5% amount to get "Possession for Furniture work".

So the loan disbursement is spread across three FY 2012-13, 2013-14, 2015-16. The loan disbursement will complete once bank disburses this remaining 5% amount meant to be given to the builder on possession.

I am not sure when builder will provide occupancy certificate / completion certificate for the building.

I have few questions regarding my situation :

1) The loan was taken in installations which is linked to the progress of construction. Last 5% amount of possession is remaining to be paid to the builder. Bank will be paying the last 5% amount if I agree to take the possession of flat for furniture work.

According to the article http://www.charteredclub.com/tax-benefit-on-home-loan/ : If the property is not acquired/constructed completed within 3 years from the end of financial year in which the loan was taken, the interest benefit in this case would be reduced from 2 Lakhs to Rs 30 thousand.

For calculating the tax benefit on interest paid as per section 24, construction period limit of 3 years should be considered from end of financial year when first disbursement is made (i.e. 3 years from FY 2013-14) or from the end of financial year in which last disbursement of the home loan is made (i.e. 3 years from FY 2016-17) ?

2) As per article https://www.hinote.in/tax-benefit-housing-loan-interest-rs-30000-rs-200000 : The law does not explicitly state which year should be considered as the year of loan borrowing if the loan is taken across installments spread over more than one financial year. Since the loan can be said to have been fully disbursed only after the last installment, one could consider the year of the last installment as the loan disbursal year for the purpose of tax calculation.

3) I went through various articles which does not seem to certainly tell about year of loan approval

* http://www.forum.charteredclub.com/threads/clarification-needed-on-section-24.1057/ says that year of loan borrowing should be the year of agreement

* http://www.forum.charteredclub.com/threads/tax-benefit-on-home-loan-interest-section-24-3-years-construction-period-clarification.2923/ does not clearly specify what should be year of borrowing in case the loan is disbursed in installments

* http://www.forum.charteredclub.com/threads/clarification-on-section-24.8324/ does not handle the case when loan is disbursed in installments

4) We should apply for home loan principle and interest deductions only after we get occupancy certificate / completion certificate from the builder ? If we don't get occupation certificate / completion certificate from builder till 31 Mar 2016 then we should not apply for home loan principle and interest deductions for current FY 2015-16 ?

5) Like for home loan interest deduction there is a limit of construction should be completed in 3 years otherwise the interest benefit drops from 2 Lakhs to 30 thousand, there is any construction period limit for home loan principle amount deduction ? i.e. Even if the construction completes after 3 years we can take benefit for whole amount of home loan principle as per 80 C (max 1,50,000) ?

Thank you very much...

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Q1, Q2, Q 3 The loan was taken in installations which is linked to the progress of construction.

Yes the law is vague. General practice is take the last disbursement. Best consult a CA and go by his advise, incase of inquiry he would be able to support you.

4) We should apply for home loan principle and interest deductions only after we get occupancy certificate / completion certificate from the builder ?

Yes you can only claim for Year 2015-16 if you get a possession/completion certificate from Builder before 31 March 2016. Note Possession for Furniture has no meaning/relevance from tax point of view.

5) Like for home loan interest deduction there is a limit of

No. However note that any Principal that you are paying during construction, cannot be claimed.

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acquisition or construction is to be completed within three years from the end of the financial year in which capital was borrowed to qualify for deduction of Loan Interest

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