Dear Nitin,
I understand that you have booked a flat in Noida, the construction of which will be completed in year 2015-16. Further, you have also taken a loan on this property on which you are paying EMI. Advice on your queries in light of provisions of the Income Tax Act are as under:
1. Since you are living in varanasi and you can not stay in your newly constructed house in Noida by reason of employment in Varanasi, therefore you can claim the house at Noida as a 'self occupied property' (SOP) provided you have not let it out on rent. The value of an SOP under section 23 is NIL and you are not required to pay anything on the same. Further you get benefit of payment of interest on loan on such house under section 24.
2. However if the said house at Noida is given on rent anytime during the year, then the Annual rent received or which the said house can fetch from market has to be offered to tax under section 22 of the Act. Here you get 30% deduction under section 24(a) on value shown in return of income and also deduction of interest under section .
3. From the payment of EMI, you can derive two benefits namely, interest payment is treated as an expenses u/s 24 and payment of principal amount of loan is taken as Investment and benefit derived under section 80C of the Act. You can get the break up of EMI into interest and principal from the Bank.
4. Under section 24(b), you can get benefit from payment of interest upto Rs. 150000 per year from the date of completion of House. Further, you might have also paid interest during the period of construction of house. For this also, you get benefit of deduction of interest as expenses by amortising the interest paid upto the date of construction for next 5 years.
