Home Loan rebate in Indian Income tax

Question

I had taken a home loan in Jul 14. Took possession in Mar 16. Since the loan was partially disbursed I was paying the Pre-EMI’s till Feb 16. EMIs started from March 16.

1. YEAR PEMI INTEREST Principal
2. FY 14-15 60000 0
3. FY 15-16 150000 0
4. FY 16-17 160000 50000 10000

So for claiming the Sec 24 benefit, which calculation is correct.

CASE 1: PEMI for (FY 14-15 + FY 15-16)/5 + PEMI for FY 16-17 + INTEREST for FY 16-17 provided the upper limit of 2 Lakhs

CASE 2: PEMI for (FY 14-15 + FY 15-16+ FY 16-17)/5 + INTEREST for FY 16-17 provided the upper limit of 2 Lakhs

Can someone please help.

Answer 1

As you took possession for House say on 1st March 2016. For the Financial year 1 April 2015 to 31 March 2016; you should/could have claimed all the interest paid [including preEMI] of the Financial year 1 April 2015 to 31 March 2016 plus 20% of PreEMI Interest for 1st April 2014 to 31 March 2015. Subject to limit of Rs 2,00,000.

From you question it looks like you have not done. So the Case 2 is applicable to you. So for the current Year; all interest paid from 1st April 2016 to 31 March 2017 plus 20% of all interest [including preEMI interest] subject to Rs 2,00,000.

It maybe prudent to check with CA if you want to amend last years [Financial Year 1 April 2015 to 31 March 2016] Tax returns and claim a refund.