Primus Techsystem
Assistant Engineer, Indian Telephone Industries,
+2 Others

Can the pre emi interest be not allowed by employee meaning my employer asks me to claim it when Ifile my returns. Anyone aware whether the Pre EMI can be reviewed by employer
From India, Bangalore
I dont think so. You may need to check with your CA.
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From India, Mumbai
Yes, all the payments towards interest and principal payment on Housing loan are liable for IT exemption. Whether it is EMI or pre-EMI, it doesn’t matter. Abbas.P.S
From India, Bangalore
You can't claim pre-EMI interest for tax rebate till the building construction is completed and total loan disbursement is made. However, the same can be claimed subsequently when you start repaying the EMI.
For details, read here.
Tax benefits applicable on pre-EMIs - Economic Times

From India, Lucknow
Dear friends,
There is no reference on EMI in the IT act. Repayment is bifurcated into two components. One is interest and another one is principal. The Bank will issue crtificate on these two components and accordingly tax exemption can be availed. Whether it is EMI or Pre EMI, it doesn't matter.

From India, Bangalore
Dear All,

Pls read as how the pre-EMI interest is allowed for tax exemption. (taken from a tax web site).

As per Income tax pre construction period means

Interest up to the end of Financial year ,immediate proceeding to the year in which house is completed.

suppose loan is taken on Jan ,2008 and House is completed on 31.01.2010, in that case pre -construction Interest is taken from Jan 2008 to March 2009.

In above example ,even if House is completed on 31.03.2010 then also the pre construction Interest is considered From Jan 2008 to march 2009.

As per Bank Pre -EMI interest means ,Interest Due up to the start of payment of First Instalment..So term used in Bank statement or loan certificate is not similar as defined in Income Tax Act.

In above example suppose bank has granted and disbursed the Loan in Jan 2008 but EMI started from Jan 2009.Then Interest from JAN,2008 to Jan 2009 is treated as PRE-EMI interest By the bank.

Instalments Of pre-Construction Interest as per Income Tax Act.

Suppose : Person has taken a Loan of 10,00,000 in July 2007 @ 10% and house is completed in Jan ,2010.

Year wise Interest is

FY 2007-08=60000(July to March)

FY 2008-09=80000

FY 2009-10 =70000

then define Pre construction period and how much amount will be allowed u/s 24(b) year wise

In above example ,pre construction period is July 2007 to March 2009 and pre construction period Interest is 140000(60000+80000) ,and deduction of the pre construction period is divided in 5 instalments of 28000 (140000/5).and deduction will be allowed from FY 2009-10.

so in FY 2009-10 interest allowed will be 70000+28000(ist instalment of pre construction period)=98000

and 28000 will also be allowed in 2010-11,2011-12,2012-13 and 2013-14 as pre construction period interest in addition to normal interest due in given years.

From India, Lucknow
Dear friends,
I have taken a housing loan from SBI. The Manager has issued me a certificate on interest and principal components clubbing both pre-EMI and EMI pyments. I availed the tax exemption based on the above details. Here I didn't experienced any difference between pre-EMI and EMI payments which was not mention in certificate. Whether the repayment is EMI and pre-EMI, there is no need to mention in the certificate. Only thing to be noticed is how much is the amount remitted to Bank consolidating EMI and pre EMI. Out of which how much is the interest component and how much is the principal component. Accordingly the IT exemption can be availed.

From India, Bangalore
Hai members,
in continuation of clarifications regarding the pre emi, emi, principal amounts, most the banks are not issuing proper certificates which are required by the act.
In the certificates issued by the banks contains the amount which was paid as pre emi as whole with mentioning the from and to periods of paid pre emi amounts.
After the above certificates every year ie in every fy provisional certificate to be issued with mentioning of principal and interest components separately in advance to avail the tax from by submitting to the employer.
If any one cannot avail the tax benefit in respect of fy through the employer before march 31, then one should take housing loan certificate with latest date of after april 1st to avail the benefit directly with it department when one will submit the it returns with form 16 in case of employed person. Otherwise form 16 a for petty business people.
Splitting of pre emi calculation was given by other members can used.

From India, Visakhapatnam
Dear All,
I have gone through the above discussions. Really I appreciate the reply by PON. good illustrative.
I was struggling to know about the EMI & PREEMI. That time the then Branch Manager of State Bank of India clarified that EMI startrs only after the Transfer of Property / Possession Letter from Builder to Flat Owner. In case of construction of House the EMI Starts only after the Completion Certificate is issued by the competent authority.
Another of View of Income Tax Officer - The Property is not in your Possession / does not exists which is under construction, how you can take the benefit of the same in terms of Income Tax. The interest is shown as negative income from House Property.
Hence the benefit of PreEMI can be claimed as calculation of Mr.Pon.

From India, Pune
Possession certificate from a builder/society is must for availing tax exemption on housing loan. I don't know how SBI has given certificate by clubbing both the interest components of pre EMIs & EMIs as cited by Abbas. But the procedure is what I mentioned . I availed the tax exemption only after producing the possession certificate and bank statement.as demanded by my Accounts section.

From India, Lucknow

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