Can I claim deduction for interest paid on personal loan, used for home repairs?
Can I claim deduction under Section 24 for interest paid on personal loan, used for home renovation. If yes, which documents will be required to be attached with the ITR. As I was unaware about the rules, I filed my ITR without claiming it last year. Can I claim the deduction now?
By Balwant Jain, tax and investment expert
For claiming income tax deduction under Section 24(b) for interest paid on money borrowed for the purpose of purchase, repairs, renovation etc. of house, it is not necessary that the money should have been borrowed as home loan. Interest paid to your friends and relatives in respect of money borrowed for the purposes specified above can also be claimed under section 24(b). You need to prove the actual usage of the personal loan for the purpose of renovating your property to avail the deduction. You can easily prove that by establishing linkage between credit of the personal loan in your bank account and its corresponding use for making payments for renovation etc.
Though you are not allowed to attach any document with your ITR, you still need to preserve the documents in case you case is selected for detailed scrutiny. You need to preserve the copy of the bank statement for the relevant period as well as the statement of personal loan where the interest paid is reflecting. You also need to preserve the invoices for renovation done.
If you have not claimed the deduction on interest paid for personal loan during the last year in your income tax return, you can still do so by revising your ITR.
(Views as expressed by the expert are his own.)
Published at Mon, 14 Dec 2020 01:29:56 +0000