Income or loss from house property and exemption on housing loan interest
Computation of Income under the head income or loss from house property – Income Tax Department instructions on calculation of annual rental value for the income tax deduction in respect of interest payable on housing loan and
Update: 25th September 2017: Income Tax Exemption on Interest Paid on Housing Loan – Capped at Rs. 2 lakh for rented property also
While taking into account the loss from House Property, the DDO shall ensure that the employee files the declaration referred to above and encloses therewith a computation of such loss from house property. Following details shall be obtained and kept by the employer in respect of loss claimed under the head “ Income from house property” separately for each house property:
a) Gross annual rent/value
b) Municipal Taxes paid, if any
c) Deduction claimed for interest paid, if any
d) Other deductions claimed
e) Address of the property
f) Amount of loan, if any; and
g) Name and address of the lender (loan provider)
Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]:
Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-
(i) the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
(ii) the quantum of deduction allowed as per table below:
| Sl No |
Purpose of borrowing capital |
Date of borrowing |
Maximum Deduction |
|
1 |
Repair or renewal or reconstruction of the house |
Any time | Rs. 30,000/- |
|
2 |
Acquisition or construction of the house | Before 01.04.1999 | Rs. 30,000/- |
|
3 |
Acquisition or construction of the house | On or after 01.04.1999 |
Rs. 1,50,000/- |
|
Rs. 2,00,000/- |
In case of Serial No. 3 above
(a) The acquisition or construction of the house should be completed within 3 years from the end of the FY in which the capital was borrowed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
(b) Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.
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Download Income Tax Department Circular No.20/2015 (F.No. 275/192/2015-IT(B) dated 02.12.2015