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 Assessee 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
capital

Maximum Deduction
allowable

1

Repair or renewal or reconstruction of the
house
Any timeRs. 30,000/-

2

Acquisition or construction of the houseBefore 01.04.1999Rs. 30,000/-

3

Acquisition or construction of the houseOn or after 01.04.1999Rs. 2,00,000/- (Rs. 1.50 Lakh Up to A.Y. 2014-15)

In case of Serial No. 3 above

ID-100266627(a) The acquisition or constructing of the house should be completed within 3 years from the end of the FY in which the capital was borrowed. 

(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 Assessee has to acquire before  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.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

(Republished with Amendments)

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