Q.Mr. Roy took a loan on 1 April 2020 for constructing his self-occupied house. Construction was completed on 31 March 2027. He paid interest of ₹2,50,000 on this loan during the previous year 2025-26. State, with reasons, the maximum interest deduction Mr. Roy can claim under Section 24(b) for AY 2026-27.

The higher ₹2,00,000 ceiling for a purchase/construction loan applies only where construction finishes within 5 years of the end of the financial year the loan was taken — missing that window drops the ceiling to ₹30,000.

The loan was taken on 1 April 2020, which falls in Financial Year 2020-21 (1 April 2020 to 31 March 2021). The 5-year window for the higher ₹2,00,000 ceiling runs from the END of that financial year — i.e., up to 31 March 2026. Construction, however, was completed only on 31 March 2027, which is beyond this 5-year window.

Because the completion condition for the higher ceiling is not met, the loan falls into the OTHER category under Section 24(b) — even though it genuinely was a construction loan — and the applicable ceiling drops to ₹30,000, regardless of the actual ₹2,50,000 interest paid.

Students often grant the ₹2,00,000 ceiling to any construction loan without checking the completion-timing condition — the PURPOSE of the loan (construction) is necessary but not sufficient; the construction must also actually finish within 5 years …