Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital on Home Loan 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:
|Purpose of borrowing capital||Date of borrowing
|1||Repair or renewal or reconstruction of the
|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. 2,00,000/- (Rs. 1.50 Lakh Up to A.Y. 2014-15)|
In case of Serial No. 3 above
(a) The acquisition or constructing of the house should be completed within 5 years (3 years upto A.y 2016-17) 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.
Please note with effect from financial year 2017-18 Govt has restricted the limit of set off of loss from house property against other heads of Income to Rs. 2 Lakh. Till financial year 2016-17 there was no restriction and assessee was allowed to set-off any loss from house property against other heads of Income. Please note the restriction is placed on set-off of losses and not on the amount of home loan interest that can be claimed as a deduction under Section 24 for a rented house property, the losses which could arise on account of such interest repayment can be set off only to the extent of Rs 2 lakhs. Such loss in excess of Rs. 2 Lakh can be carried forward for upto 8 Assessment Years succeeding the year of loss and can be set off against Income under the head House Property.
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(Republished with Amendments)