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:
| Sl No |
Purpose of borrowing capital | Date of borrowing capital |
Maximum Deduction allowable |
| 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. 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)
Whether the word “reconstruction” mentioned in second proviso to Section 24 (b) includes construction of first floor of the self occupied property for which loan was availed already and interest exemption was being availed. Is it possible to include the interest on second loan availed for construction of first floor in the Rs two lakh exemption limit.
Sir,
I have taken home loan of 14.5 lac in May16 for construction purpose and construction is completed on Feb17, EMI specified by Bank is 16500 but i paid 20000 to reduce the burden and total amount of interest paid during the year is 90000, i just want to know how much deduction i claim u/s 80 and u/s 24
i have taken a housing loan in chennai for property construction , but due to employment I m working in New delhi, can I claim for deduction of interest on houseing loan
sir ,
I have a flat in Noida which is vacant and also second home in Noida for which I am going to get possession in march 16. For both the houses I have taken a home loan and paying intrest. For second home I have taken a home loan in 2010. I am staying in rented flat in delhi.
What tax benefit i can get under which section
hello sir
i want to know that i have purchased a land and constructed a house and for that i took a loan. and now i want to know the interest related to land will include in pre construction period or it will allowed in full.
I availed a loan of Rs.2500000/-from financial institution for acquiring a flat and Loan Ist instalment is released on 15.9.2011. Flat is completed and handed over to me on 18.5.2015. Please advise whether I can claim the benefit of Pre EMI interest in 5 instalments for the period 2011 to 31.3.2015 and current interest to the extent of Rs.2 lacs for the year 2015-16.
I have my departmental housing loan. The interest is not recovering until principal amount not recovered, can i take benefit of interest
I have taken loan of Rs. 10.50 lacs (10 years term) to construct 2BHK on first floor of my existing house. How much duduction I can get on principal amount under sec 80C & intesrest amount under sec 24(b)?
Sir,
I need clarity considering time line condition under section 24(b). If Loan sanction date is Oct’2010 and property is occupied during Sep’14, then interest benefir of 1,50,000 can be taken or not?
I too am seeking a clarification in this regard. In my case an additional complication is that the loan amount is disbursed in two instalments in two consecutive financial years. Three year period is to be reckoned from the disbursal of second and final instalment or the first instalment?
Dear Sir
In respect of a Housing loan availed by wife for construction of a residential building in the property of husband, ie, land is in the name of husband, who is an unemployed, whether , wife can claim full amount of Interest and Principal for Income tax on salaries . House construction completed as on 31.3.2012 and last year employer allowed Interest and Principal for TDS and this year employer informed that only the owner of the property can claim interest on Housing Loan. Please advice with any decided case laws or specifying the law
If a person has constructed his house on a plot of land and after some year he has done enlargement of house by construting 1st floor, how much maximum rebate on interest for loan availed for enlargement of house is permitted.
But why such decision was made :-
Co. isn’t entitled to deduction of interest under sec. 24(b) as it can’t utilize properties for ‘own residence’
January 30, 2015[2015] 53 taxmann.com 310 (Mumbai – Trib.)
IT: Even where assessee-company had paid interest on borrowed fund, deduction under section 24(b) could not be allowable as such provision is applicable only to self occupied properties
[2015] 53 taxmann.com 310 (Mumbai – Trib.)
IN THE ITAT MUMBAI BENCH ‘SMC’
As per my Knowledge there is no provision in the Income Tax Act which denies such claim of HRA and Interest . It is stated that it should be explainable to the assesing officer.
It is incorrect to say that Rs.30,000/- is allowable for repair, renewal or reconstruction of the house carried out at any point of time. The second proviso to Section 24(b) clearly restricts the allowability of interest on borrowed capital only for acquisition or construction effected on or after 1/4/1999. Therefore, no interest on capital borrowed on or after 1/4/1999 and is used against repair, renewal or reconstruction is allowable.
Very informative. thanks
I think the provisions refered here are only applicable in case of Employer giving benefit of Loss from House Property while computing Taxable Income for TDS on Salaries. Interest on borrowed capital is not limited by these provisions if the house property has been let out.
Informative article
I would like to add that many employees do not know these provisions and try to claim both HRA and interest while living in the same city. this is not advisable.