Deductions - (Section 24) - Income Tax - Ready Reckoner - Income Tax

SEC - 24 : DEDUCTIONS FROM NET ANNUAL VALUE Annual value chargeable under head Income from House Property shall be computed after making the following deductions: Statutory deduction i.e. 30% of Net Annual Value Amount of interest payable on borrowed capital SEC 24(b) : DEDUCTIONS FROM INTEREST Interest on borrowed capital is allowable as deduction on accrual basis (even if account books are kept on cash basis) if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the house property. MAXIMUM LIMIT OF DEDUCTION In Let Out Property/Deemed to be Let Out = No maximum limit In Self-occupied property Loan taken before 01.04.1999 Loan taken on or after 01.04.1999 Loan taken on or after 01.04.1999 PURPOSES: Purchase / Acquisition or Construction or Renovation or Repairing b Extension etc. PURPOSES: Renovation / repairing / extension etc. or Where loan is taken for the purpose of purchase / acquisition or construction and Such purchase / acquisition or construction is NOT COMPLETED within 5 years (FA, 2016, w.e.f. 1.4.2017) from the end of the financial year in which loan was borrowed. PURPOSES: Purchase / acquisition or construction and Such purchase / acquisition or construction is COMPLETED within 5 years (FA, 2016, w.e.f. 1.4.2017) from the end of the financial year in which loan was borrowed. Aggregate* amount [FA 2019 w.e.f. 1-4-2020] of Deduction = 30,000 (Max) Aggregate* amount [FA 2019 w.e.f. 1-4-2020] of Deduction = 30,000 (Max) Aggregate* amount [FA 2019 w.e.f. 1-4-2020] of Deduction = 2,00,000 (Max) *Aggregate amount relates to property referred in sec 23(2) consist of more than TWO HOUSES [FA 2019, w.e.f. 1-4-2020] INTEREST FOR PRE-CONSTRUCTION / ACQUISITION PERIOD Interest for pre-construction / Acquisition period is allowable in 5 equal installment beginning from the year of completion of house property. This deduction is not allowable if the loan is utilized for repairs, renewal or reconstruction. NOTES W.e.f A.Y. 2021-22, If an assessee opts to be taxed u/s 115BAC, he shall not be entitled to deduction of the above interest of Rs. 30,000 or Rs. 2,00,000, as the case may be. As the deduction is available on accrual basis, it should be claimed as deduction on yearly basis, even if the interest is not actually paid during the year. Deduction is available even if neither the principal nor the interest is a charge on property. Interest on unpaid interest is not deductible Shew Kissen Bhatter v. CIT 1973 (3) TMI 2 - SUPREME Court. No deduction is allowed for any brokerage or commission for arranging the loan. Interest on a fresh loan, taken to repay the original loan raised for the aforesaid purposes, is allowable as deduction Circular No. 28, dated August 20, 1969 . Any interest chargeable under the Act , in the hands of recipient and payable out of India, on which tax has not been paid or deducted at source, and in respect of which there is no person who may be treated as an agent, is not deductible, by virtue of section 25 , in computing income chargeable under the head Income from house property .