Commercial property, 
deductions, Interest, Commercial property, House

Deduction Of Interest Under Section 24b Also Applicable On Commercial Property

You can set-off up to Rs 2 lakh as loss under house property against other income during the year, and carry forward the loss not set-off for eight subsequent years. Income earned from investment of such money gifted by your son will be taxable in your hands. Any transfer of asset to spouse, without adequate consideration will attract clubbing provisions

I have invested in a commercial property for which I have taken a loan. I am now repaying that loan. Can I claim tax benefit for interest paid and repayment of the loan?


Under Section 24b of the Income-tax Act, 1961, a person is entitled to claim interest paid on the money borrowed for the purpose of buying a property, income where of is taxable under the head ‘income from house property’.

Do note that the interest deduction available under Section 24b is not restricted to residential house property only. However, the benefits of principal repayment under Section 80C is only available in respect of residential house property and thus cannot be claimed in respect of commercial property.

You can start claiming the interest paid on the loan from the year in which you have taken the possession. There is restriction up to Rs. 2 lakh of loss under the house property head which can be set-off against other income during the year and the loss not so set-off during the current year can be carried forward for eight subsequent years which can be set-off against house property income only


My son, who is a marine engineer, is serving on a foreign ship. He issues cheques to me from his non-resident external (NRE) account in India for large amounts as gift. Am I liable to pay any income or gift tax for the amounts that I receive?


According to the income tax provisions, any sum of money received from a relative as gift is exempt from tax. The term relative has also been defined in the Income-tax Act, 1961, and son is one of the relatives included in the definition. So, the sum gifted to you by your son shall not be treated as income in your hands. However, the income earned from investment of such gifted sum shall be taxable in your hands.

Do note that you may be asked by the tax officer to explain the receipt of gift for which you will, then, have to explain and/or give complete details. The tax officer may also ask your son to explain source of the funds gifted to you.


I am a salaried individual. I have gifted some money to my wife from which she has opened a fixed deposit (FD) in her name. She is a homemaker and has no source of income. What is the tax treatment for the interest on the fixed deposit?


Any transfer of asset to spouse, without adequate consideration, attracts clubbing provisions. The income arising to the spouse from the asset gifted is required to be added to the income of the transferor spouse.

In view of the same, the interest income, arising from investment made by your wife in the fixed deposit, out of the gifted money, shall be clubbed with your income. The clubbing provisions will apply till the relationship of husband and wife continues. The clubbing will apply on subsequent conversions from one form of asset to another form of asset.

Do note that the clubbing provisions apply only on the income relatable to the asset transferred and not on the income so generated and reinvested. So, if your wife re-invests the interest income in any other income-bearing instrument and earns income from that, the second generation of income shall not be subject to clubbing, and will be taxable in her hands only. Do note that there is no tax incidence at the time of receipt of the gifts, as any gift received from a relative, including spouse, is not to be treated as income.

The author is a tax and investment expert

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)

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