Income from house property – Exemption for Interest paid on Housing Loan

Income from house property – Exemption for Interest paid on Housing Loan – Computation of Income from house property

Update : After Budget 2014, Income Tax Exemption / Deduction allowed from Income in respect of Interest payable on Housing Loan has been increased to Rs. 2 lakh. Click here to get Revised GConnect Calculator for Exemption for Interest paid on Housing Loan 

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)

3.6.1    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:

SlNo Purpose of borrowing capital

Date of borrowing

capital

Maximum Deduction

allowable

1

Repair or renewal or reconstruction of thehouse 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/-

In case of Serial No. 3 above

(a) The acquisition   or constructing of the house should be completed within3 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 and constructed shall be deducted in equal installments for the FY in question and subsequent four FYs.

(c) The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of  Principal and Interest of the loan so repaid.

Download Income Tax Circular No: 8/2013 dated 10.10.2013 for instructions on Calculation of Income Tax for Salaried Employees

Click here for online GConnect Income Tax Calculator 2013-14 (Assessment Year 2014-15)

Important Sections in Income Tax Circular 08/2013 dated 10.10.2013
Rates of Income Tax for the year 2013-14 (Assessment Year 2014-15)
Method of Income Tax Calculation for the year 2013-14
Income from house property – Exemption for Interest paid on Housing Loan
Calculation of Income Tax for the year 2013-14
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