Is interest paid on Car Loan Tax Deductible?
As per Income Tax Act 1961,if any asset is acquired for business purpose and for that asset a loan is being taken on the same then interest can be capitalised if any interest is paid prior to the purchase of the asset. Hence you can claim depreciation under section 32 in this regard. On the other hand interest paid in respect of capital borrowed for the purpose of business or profession from public financial institutions or state financial institution then such interest paid will be allowed as deductions u/s 36(1),subject to section 43B which indicates that you should file returns of income within stipulated time under sec 139(1) and provided you have actually incurred such expenses and also furnish a copy of proof of such expenses incurred with filing the returns. conclusion: you can claim interest portion or the EMI portion under section 36(1).
