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On 30 June 2018 Jimmy prepaid the loan repayments for the next 12 months 1 July...

On 30 June 2018 Jimmy prepaid the loan repayments for the next 12 months 1 July 2018 to 30 June 2019           $18000

Will it be deductible under allowable deductions if we have to calculate taxable income for the year ended 30 June 2018? If No, what is the reason?

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Answer #1
  • First step is to calculate your gross salary by adding all taxable components of salary- Basic Pay, Dearness Allowance, HRA, Special & other allowances.
  • Once you get this amount, add the extra income of interests, rental on property, bonuses & income from other sources, if any.
  • Add capital gains from all assets- Equity or Debt instruments, Real Estate, Unlisted shares etc.
  • Deduct all exemptions- standard exemption of ₹50,000/- (available to all), HRA exemption, from your gross income.
  • Further subtract basic deductions under Section 80C, 80D or any other deductions that are applicable.
  • The income arrived is your Net Taxable Income.

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