Compound Interest on Home Loan Not Allowable as Deduction under section 24!


The home loan entitles a person so claim deduction of interest payable on the amount borrowed and utilized for the purpose of buying or constructing house. Section 24 of the Income Tax Act deals with the deduction of interest on borrowed capital. Now , when a person borrows home loan, generally , all such loan agreements keep a clause under which if the interest is not paid in time, even interest is counted for charging interest. In other words, compound interest is charged in such cases. The issue is whether the compound interest i.e interest on interest , payable on home loan is allowable as deduction under section 24 of the Income Tax Act ?

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