Tax Talk

Is there a penalty for filing revised tax returns after July 31, especially if it involves paying more tax than the earlier filed returns?

— Bhaskar

If any person having furnished a return of income before the due date (July 31) discovers any omission or any wrongful statement therein, then he may file a revised return at any time within the time limit prescribed.

Further, no penalty is levied for filing revised tax return even if such revision results in disclosure of higher income and taxes in comparison to the income and taxes disclosed in the original tax return. However, interest under section 234 A/B/C of the Act shall be levied on the additional taxes (if any) to be deposited.

My annual salary is Rs 4,80,000. For the purpose of reducing tax, I have planned to construct a house after availing housing loan. Construction will start next month. When I contacted my tax consultant he informed me that deduction u/s 24 and u/s 80C with respect to interest on housing loan and repayment of principal will be available after completion of the house.

My doubt is whether I will get deduction u/s 24 and 80C during the construction period.

If not, will I get interest on pre-construction period accumulated and allowed as a deduction after the house is constructed?

— Ragesh P V

According to tax laws in India, deduction towards interest and principal paid on loan availed for the purpose of construction of house is available only from the financial year in which the construction of the house is completed.

Accordingly, deduction u/s 24(b) towards payment of interest and deduction (up to a maximum limit of Rs 1,00,000) u/s 80 C towards principal repayment will be allowed only after completion of the construction of the house, from the financial year in which the construction of the house is completed.

The total pre-construction interest paid till March 31, prior to the financial year in which the construction of the house was completed, shall be allowed as deduction in five equal annual instalments commencing from the financial year in which the construction of the house is completed.

It is pertinent to know that there is a limit on the quantum of deduction which could be availed towards interest payment. For self-occupied property, the maximum deduction towards interest is Rs 1,50,000 per financial year. However, in case of let out property, the entire interest can be claimed as deduction against the annual rental value of the said property computed according to the provisions of the Income Tax Act, 1961.

Mail your queries to >taxtalk@thehindu.co.in

(The author is a practising chartered accountant)

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