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10/17/23, 10:35 PM Income Tax Department
* Any interest pertaining to the period prior to the year of acquisition/ construction of the house property
shall be allowed as deduction in five equal installments, beginning with the year in which the property
was acquired/ constructed.
* Deduction for interest on borrowed capital shall be limited to Rs. 30,000 in following circumstances:
a) If capital is borrowed before 01-04-1999 for the purpose of purchase or construction of a house
property;
b) If capital is borrowed on or after 01-04-1999 for the purpose of re-construction, repairs or renewals of
a house property;
c) If capital is borrowed on or after 01-04-1999 but construction of house property is not completed
within five years from end of the previous year in which capital was borrowed.
Note:
With effect from Assessment Year 2020-21, deduction for interest paid or payable on borrowed capital
shall be allowed in respect of two self-occupied house properties. However, the aggregate amount of
deduction under this provision shall remain same i.e., Rs. 30,000 or Rs. 2,00,000, as the case may be.
2.4.1 Deduction for interest on housing loan [Section 80EE]
Deduction of up to Rs 50,000 shall be allowed to an Individual for interest payable on loan taken for the
purpose of acquisition of a house property subject to following conditions:
a) Loan has been sanctioned by Financial institution during the financial year 2016-17;
b) The amount of loan sanctioned does not exceed Rs 35,00,000;
c) The value of residential property does not exceed Rs 50,00,000;
d) The assessee does not own any residential house property on the date of sanction of loan;
e) Where deduction has been allowed under this section, no deduction shall be allowed in respect of
such interest under any other provision.
2.4.2 Deduction for interest paid on housing loan taken for affordable housing [Section 80EEA]
With an objective to provide an impetus to the ‘Housing for all’ initiative of the Government and to enable
the home buyer to have low-cost funds at his disposal, the Finance (No. 2) Act, 2019 has inserted a new
Section 80EEA under the Income-tax Act for those individuals who are not eligible to claim deduction
under Section 80EE. An individual can claim deduction of up to Rs. 150,000 under Section 80EEA
subject to following conditions:
(a) Loan should be sanctioned by the financial institution during the period beginning on 01-04-2019 and
ending on the 31-03-2022;
(b) Stamp duty value of residential house property should not exceed Rs. 45 lakhs;
(c) The assessee should not own any residential house property on the date of sanction of loan; and
(d) The assessee should not be eligible to claim deduction under Section 80EE.
Hence, an individual who does not meet the criteria of Section 80EE shall now be eligible to claim
deduction under Section 80EEA of up to Rs. 150,000 in addition to deduction under section 24(b). This
deduction is available from Assessment Year 2020-21.
2.5 Computation of Income from House Property
S. Property Type Gross Deduction Net Standard Interest on
No. Annual for Annual Deduction borrowed capital
Value of municipal Value of
taxes
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10/17/23, 10:35 PM Income Tax Department
the the
property property
1. Self-occupied house Nil Nil Nil Nil Aggregate Deduction
property/properties for interest on
borrowed capital is
allowed up to Rs.
30,000 or Rs.
2,00,000, as the case
may be.
2. House property could Nil Nil Nil Nil Deduction for
not be occupied by the interest on borrowed
owner due to capital is allowed up
employment or to Rs. 30,000 or Rs.
business carried on at 2,00,000, as the case
any other place may be.
3. Let out property To be Allowed on Gross 30% of Net Entire amount of
computed actual annual Annual interest paid or
as per payment value less Value payable on borrowed
provisions basis Municipal capital shall be
of Section taxes allowed as
23(1) deduction. Pre-
construction interest
shall be allowed as
deduction in 5 annual
equal installments
(Subject to certain
conditions).
4. More than two-self Only two properties selected by the taxpayer will be considered as self-
occupied properties occupied house properties and all other properties shall be deemed to be
let-out for the purpose of computation of income under the head house
property.
5. Self-occupied The house will be taken as let-out property and no concession shall be
property/properties let- available for the duration during which the property was self-occupied.
out for the part of the
year
6. One part of the Each part of the property shall be considered as separate property and
property is let-out and income will be computed accordingly
other part is used for
self-occupied purposes
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