Revised Income Tax Exemption Calculator for Interest paid on Housing Loan – Income or Loss or House Property Calculation under Section 24 of the Income Tax Act.
Needless to say, GConnect Income Tax Exemption Calculator for Interest paid on Housing Loan is being used widely among salaried employees from the year 2008 itself. This Income or Loss on House Property Calculator calls for revision as the additional Income Tax Exemption of Rs. 50,000 provided in budget 2014 (Finance Bill 2 of 2014) increases the total deduction interest paid on Housing Loan (Interest on house property) available under Section 24 of the Income Tax Act in respect of self occupied house, to Rs. 2 Lakhs (Rs. 2,00,000).
Also, in addition to Deduction of of Interest payable on Housing Loan up to Rs. 2 Lakhs from the total income (and without any limit for Housing property rented out for an annual value), (this additional exemption is not valid any more as those pertaining to financial year 2013-14, and 2014-15)
the new section in the form of Section 80 EE introduced in the last Budget (2013) provides for additional deduction / Income Tax Exemption for Interest paid on housing loan up to Rs. 1 lakh in respect of housing loan sanctioned / disbursed during the year 2013-14 for a first time house buyer with total property cost and amount of loan are not exceeding Rs. 40 lakh and Rs. 25 lakh respectively. This additional deduction of Rs. 1 lakh can either be availed fully in the income tax assessment year 2014-15 (Financial Year 2013-14) or partly in 2014-15 and remaining balance in Assessment year 2015-16 ( Financial Year 2014-15) in case interest payable in A.Year 2014-15 was not exceeding Rs. 1 lakh
So, GConnect IT Exemption Calculator for Interest paid housing loan requires to be modified on this aspect also
The relevant portions of Section 24 and Section 80 EE of the Income Tax Act are as follows
Section 24 of Income Tax Act (After amendment as per Finance bill 2 of 2014
Income or Loss from House Property Addition / Deductions to / from income .
Section 24. Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:—
(a) a sum equal to thirty per cent of the annual value;
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:
Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees :
Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed within three years from the end of the financial year in which capital was borrowed], the amount of deduction under this clause shall not exceed Two Lakh Rupees.
Explanation.—Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal installments for the said previous year and for each of the four immediately succeeding previous years:]
Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.
Deduction of Additional interest of Rs. 1 lakh for housing loan taken in 203-14
80EE. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.
(2) The deduction under sub-section (1) shall not exceed one lakh rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2014 and in a case where the interest payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be allowed in the assessment year beginning on the 1st day of April, 2015.
(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—
(i) the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;
(ii) the amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees;
(iii) the value of the residential house property does not exceed forty lakh rupees;
(iv) the assessee does not own any residential house property on the date of sanction of the loan.
(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.