While having discussion with many of the Personal Income Tax Payers
known to us it came to light that they did not aware of the restriction
of exemption allowed / Loss allowed to deducted from Income in respect
of Interest paid on Housing Loan to Rs. 2 lakh even in the case of
Housing Property is rented out.
Income from house property.
Section 22. The annual
value of property consisting of any buildings or lands appurtenant
thereto of which the assessee is the owner, other than such portions of
such property as he may occupy for the purposes of any business or
profession carried on by him the profits of which are chargeable to
income-tax, shall be chargeable to income-tax under the head “Income
from house property”.
Annual value how determined.
23. (1) For the purposes of
section 22, the annual value of any property shall be deemed to be—
(a) the sum for which the property might reasonably be expected to let from year to year; or
(b) where the
property or any part of the property is let and the actual rent received
or receivable by the owner in respect thereof is in excess of the sum
referred to in clause (a), the amount so received or receivable; or
(c) where the
property or any part of the property is let and was vacant during the
whole or any part of the previous year and owing to such vacancy the
actual rent received or receivable by the owner in respect thereof is
less than the sum referred to in clause (a), the amount so received or receivable :
Provided that the taxes
levied by any local authority in respect of the property shall be
deducted (irrespective of the previous year in which the liability to
pay such taxes was incurred by the owner according to the method of
accounting regularly employed by him) in determining the annual value of
the property of that previous year in which such taxes are actually
paid by him.
Explanation.—For the purposes of clause (
b) or clause (
c) of this sub-section, the amount of actual rent received or receivable by the owner shall not include, subject to such rules
22 as may be made in this behalf, the amount of rent which the owner cannot realise.
(2) Where the property consists of a house or part of a house which—
(a) is in the occupation of the owner for the purposes of his own residence; or
(b) cannot actually
be occupied by the owner by reason of the fact that owing to his
employment, business or profession carried on at any other place, he has
to reside at that other place in a building not belonging to him,
the annual value of such house or part of the house shall be taken to be nil.
(3) The provisions of sub-section (2) shall not apply if—
(a) the house or part of the house is actually let during the whole or any part of the previous year; or
(b) any other benefit therefrom is derived by the owner.
(4) Where the property referred to in sub-section (2) consists of more than one house—
(a) the provisions
of that sub-section shall apply only in respect of one of such houses,
which the assessee may, at his option, specify in this behalf;
(b) the annual value
of the house or houses, other than the house in respect of which the
assessee has exercised an option under clause (a), shall be determined under sub-section (1) as if such house or houses had been let.
Following sub-section (5) shall be inserted after sub-section (4) of section 23 by the Finance Act, 2017, w.e.f. 1-4-2018 :
(5) Where the property
consisting of any building or land appurtenant thereto is held as
stock-in-trade and the property or any part of the property is not let
during the whole or any part of the previous year, the annual value of
such property or part of the property, for the period up to one year
from the end of the financial year in which the certificate of
completion of construction of the property is obtained from the
competent authority, shall be taken to be nil.
Deductions from income from house property.
24. Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:—
(a) a sum equal to thirty per cent of the annual value;
(b) where the property
has been acquired, constructed, repaired, renewed or reconstructed with
borrowed capital, the amount of any interest payable on such capital:
Provided that in respect of property referred to in sub-section (2) of
section 23, the amount of deduction shall not exceed thirty thousand rupees :
Provided further that
where the property referred to in the first proviso is acquired or
constructed with capital borrowed on or after the 1st day of April, 1999
and such acquisition or construction is completed within
24[
five]
years from the end of the financial year in which capital was borrowed,
the amount of deduction under this clause shall not exceed two lakh
rupees.
Explanation.—Where
the property has been acquired or constructed with borrowed capital, the
interest, if any, payable on such capital borrowed for the period prior
to the previous year in which the property has been acquired or
constructed, as reduced by any part thereof allowed as deduction under
any other provision of this Act, shall be deducted under this clause in
equal instalments for the said previous year and for each of the four
immediately succeeding previous years:
Provided also that
no deduction shall be made under the second proviso unless the assessee
furnishes a certificate, from the person to whom any interest is payable
on the capital borrowed, specifying the amount of interest payable by
the assessee for the purpose of such acquisition or construction of the
property, or, conversion of the whole or any part of the capital
borrowed which remains to be repaid as a new loan.
Explanation.—For the
purposes of this proviso, the expression “new loan” means the whole or
any part of a loan taken by the assessee subsequent to the capital
borrowed, for the purpose of repayment of such capital.
Deduction in respect of interest on loan taken for residential house property.
80EE. (1) In computing
the total income of an assessee, being an individual, there shall be
deducted, in accordance with and subject to the provisions of this
section, interest payable on loan taken by him from any financial
institution for the purpose of acquisition of a residential property.
(2) The deduction under
sub-section (1) shall not exceed fifty thousand rupees and shall be
allowed in computing the total income of the individual for the
assessment year beginning on the 1st day of April, 2017 and subsequent
assessment years.
(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—
(i) the loan has
been sanctioned by the financial institution during the period beginning
on the 1st day of April, 2016 and ending on the 31st day of March,
2017;
(ii) the amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees;
(iii) the value of residential house property does not exceed fifty lakh rupees;
(iv) the assessee does not own any residential house property on the date of sanction of loan.
(4) Where a deduction under
this section is allowed for any interest referred to in sub-section (1),
deduction shall not be allowed in respect of such interest under any
other provision of this Act for the same or any other assessment year.
(5) For the purposes of this section,—
(a) “financial
institution” means a banking company to which the Banking Regulation
Act, 1949 (10 of 1949) applies, or any bank or banking institution
referred to in section 51 of that Act or a housing finance company;
(b) “housing
finance company” means a public company formed or registered in India
with the main object of carrying on the business of providing long-term
finance for construction or purchase of houses in India for residential
purposes.]
