Income tax section Section 24, Section 24a and Section 24b deals with house property deductions which an assessee can claim under the head Income from house property. These deductions are reduced from net annual value of house which is arrived while computing the Income from House property for the particular previous year.
What is income tax section 24
As per income tax section 24 there are two deductions from the net Annual value of house income
- Standard deduction which is Flat deduction of 30% on Net annual value (Section 24a)
- Interest on loan taken (section 24b)
What is Section 24a of income tax
Section 24a deals with standarad deduction of 30% on Net annual value of house property. A flat deduction of 30% of net annual value is allowed as deduction in case of let out property during the previous year, irrespective of the actual expenditure incurred.
When standard deduction not allowed under Section 24a
Standard deduction is not allowed in below mentioned cases:-
- Self occupied property
- Where the property is held as stock in trade and the whole/ part of the property is not let out during anytime of the PY, upto 2 years from the end of the financial year in which certificate of completion is obtained by the competent authority.
What is section 24b of income tax
Section 24b deals with Interest on loan taken to acquire/construct/repair/renew/reconstruct a property will be allowed as deduction under this section.
What is the deduction limit under section 24b
|
Conditions |
Amount of deduction for self occupied property( SOP) |
Amount of deduction for Let out property(LOP)/Deemed |
|
Loan taken to Acquire/Construct a property and the Acquisition/ construction is completed within 5 years from the end of the financial year in which the loan was taken |
Maximum 2,00,000 in case of SOP
[Certificate should be obtained from the person to whom interest should be paid] |
No ceiling limit in case of LOP/ Deemed LOP
[Certificate should be obtained from the person to whom interest should be paid] |
|
Loan take to Repair/ Renew/ Reconstruction |
Maximum 30,000 in case of SOP
|
No ceiling limit in case of LOP/ Deemed LOP |
[Note: In case of SOP, 1/5th of the accumulated interest on Pre Construction period should included within the ceiling limit *Refer below to know about Pre Construction period]
Important points for section 24b
- The amounts provided above are in case of loan borrowed on or after 1.4.99, In case the loan is borrowed before the said period then the maximum deduction allowed is 30,000. The loan should be borrowed for Acquisition/Construction/Renew/Repair/Reconstruction of the property
- Deduction is allowed on accrual basis, i.e interest amount which is accrued and not paid during the previous year will also be allowed as deduction under section 24
- If a loan is taken to repay the original loan then in such a case interest on the said loan will also be considered as deduction
- Interest accruing on unpaid interest is not allowed as deduction under this section
- Interest part of the EMI on purchase of House property will also be allowed as deduction under section 24
- Any other expenses related to the house property, are not allowed for deduction.
Pre construction period as per section 24b
The period prior to the previous year in which construction or acquisition is completed is known as pre construction period, and the interest payable during this period is known as the Pre-construction interest.
Such interest can be claimed as deduction over a period of 5 years in equal annual installment commencing from the year of acquisition or completion of construction.
Hope you have got the required information for Income tax Section 24. Please ask your queries through comments.
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