# Pre-Construction Period Interest
Interest accruing before construction is complete is not allowed in those years. It is accumulated and allowed in 5 equal installments from the year of completion.
## Defining the Pre-Construction Period
- Start: Date of borrowing
- End: Earlier of —
- 31st March immediately preceding the year of completion of construction / acquisition, OR
- Date of repayment of loan
## Treatment of PCP Interest
```
Interest from date of loan → 31 March preceding year of completion
↓
Accumulated as Pre-Construction Period Interest
↓
Allowed in 5 equal installments (1/5 each year)
↓
Starting from the previous year in which construction / acquisition is complete
```
## Total Deduction in Year of Completion (and 4 subsequent years)
```
Total Interest Deduction =
Current year interest (from year of completion onwards)
+
1/5 of Pre-Construction Period Interest
```
## Aggregate Cap (SOP under Old Regime)
- Total deduction (Current + 1/5 of PCP) is capped at ₹2,00,000 combined.
- For LOP / DLOP — fully allowed.
## Important Notes
- Loan can be from bank, FI or any other person.
- Certificate of interest must be obtained from lender.
- Penal interest (interest on unpaid interest) is NOT allowed.
- Interest is allowed on accrual basis.