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Interest on loans taken for the purpose of buying, constructing, or for the purpose of repairs and renovation of the house is exempted under Section 24 (b) of the Income Tax Act.  In the act, there is no bar that such loans should be have been taken from the financial institutions. Means it can beRead more
Interest on loans taken for the purpose of buying, constructing, or for the purpose of repairs and renovation of the house is exempted under Section 24 (b) of the Income Tax Act.  In the act, there is no bar that such loans should be have been taken from the financial institutions. Means it can be taken from anyone including your friends and relatives. Also, nothing has been prescribed for the rate of interest. However, due care must be taken on the rate of interest it should be reasonable and comparable to those available in the market.
The maximum tax deduction of Rs 2 lakh is available for the payment of interest on housing loan taken for the purpose of purchases or construction of the house, for repair and renovation Rs 30000 is exempted.
Note: Deduction of repayment of the principal amount of loan taken from other than banks & notified financial institutinis not allowed under section 80C.
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