The Finance Act 2017 introduced a new section 71(3A) to provide that with effect from financial year 2017-18, set-off of loss under the head “Income from house property” against any other head of income should be restricted upto Rs 2 lakh per year. In other words, amount of loss under the head “Income from house property’ exceeding Rs 2 lakh will not be entitled to be set-off.

This restriction affect thousands of taxpayers who have availed housing loan(s) in the past based on the provisions of the Act on set-off as it stood then. This also have an adverse impact on the real estate sector.


The restriction should apply to loss arising on account of interest payable on loans availed after 31st March 2017.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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