Date:30/07/2006 URL: http://www.thehindubusinessline.com/bline/iw/2006/07/30/stories/2006073000501300.htm

Back Tax on joint loan

T. Banusekar

My father and I took a housing loan in the proportion of 40 and 60 per cent, respectively. I pay the EMI on the loan, as my father does not have income exceeding the maximum amount not chargeable to tax. My employer insists that in computing TDS, he would give credit for only 60 per cent of the principal and interest under Sections 80C and 24. Is he correct? D. Murugan

Your employer appears to be correct. However, insofar as the deduction under Section 24 is concerned it may be possible for you to claim your father's share also as deduction if you could show that your father has advanced the amount taken as loan by him to you, in which case your father would have to issue a letter to you confirming the payment of interest to him of an amount equal to the loan charged by the bank. This would be an interest paid to your father and under instructions from him directly to the bank. As for the principal,your father's share cannot be claimed by you as a deduction, since Section 80C only permits a deduction to be claimed where the loan is taken from a bank or a housing finance company. Therefore, even if you were to take it that your father has advanced the amount taken as loan by him to you, the payment of principal will in effect have to be to your father. So Section 80C benefit will not be available to you.