Taxation - Income TaxQuestion 5624 of 146
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2. Deduction in respect of interest on loan for the P.Y. 2023-24 shall be:

Options

A` 2,02,500
B` 1,35,000
C` 5,62,500
D` 1,12,500 (2 Marks) 1 Read “opt for” as “pay tax under”
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Correct Answer

✅ Option B — ` 1,35,000

All Options:

  • A` 2,02,500
  • B` 1,35,000 ✓
  • C` 5,62,500
  • D` 1,12,500 (2 Marks) 1 Read “opt for” as “pay tax under”

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Detailed Solution & Explanation

To calculate the deduction in respect of interest on loan for the P.Y. 2023-24:
1. **Pre-construction period interest:**
- Date of loan: 01.04.2021\displaystyle 01.04.2021
- Date of completion of construction: 30.06.2022\displaystyle 30.06.2022
- Pre-construction period ends on the March 31 immediately preceding the completion of construction, i.e., 31.03.2022\displaystyle 31.03.2022.
- Pre-construction period is from 01.04.2021\displaystyle 01.04.2021 to 31.03.2022\displaystyle 31.03.2022 (12\displaystyle 12 months).
- Pre-construction interest = u20b945,00,000times10\displaystyle \\u20b945,00,000 \\times 10\\% \\times \\frac{12}{12} = \\u20b94,50,000.
- Annual installment of pre-construction interest allowable as deduction = fracu20b94,50,0005=u20b990,000\displaystyle \\frac{\\u20b94,50,000}{5} = \\u20b990,000 per annum (commencing from P.Y. 2022-23 to P.Y. 2026-27).
2. **Current year interest (P.Y. 2023-24):**
- The entire loan was repaid on 30.06.2023\displaystyle 30.06.2023.
- Thus, the loan was outstanding for 3 months (April, May, June 2023).
- Current year interest = u20b945,00,000times10\displaystyle \\u20b945,00,000 \\times 10\\% \\times \\frac{3}{12} = \\u20b91,12,500.
3. **Total interest for P.Y. 2023-24:**
- Total Interest = u20b91,12,500text(Currentyear)+u20b990,000text(Pre−constructioninstallment)=u20b92,02,500\displaystyle \\u20b91,12,500 \\text{ (Current year)} + \\u20b990,000 \\text{ (Pre-construction installment)} = \\u20b92,02,500.
4. **Apportionment between Self-Occupied and Let-Out Portions:**
- Self-occupied portion = frac13textrd\displaystyle \\frac{1}{3}\\text{rd}.
- Let-out portion = frac23textrd\displaystyle \\frac{2}{3}\\text{rd}.
- Since Ms. Prerna pays tax under the default tax regime (Section 115BAC), no deduction for interest on loan is allowed under Section 24(b) for the self-occupied portion (frac13textrd\displaystyle \\frac{1}{3}\\text{rd}).
- Deduction is allowed only for the let-out portion (frac23textrd\displaystyle \\frac{2}{3}\\text{rd}).
- Allowable interest deduction = frac23timesu20b92,02,500=u20b91,35,000\displaystyle \\frac{2}{3} \\times \\u20b92,02,500 = \\u20b91,35,000.

Hence, **Option B** is the correct answer.

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