DEDUCTIONS AVAILABLE ON INCOME FROM HOUSE PROPERTY
As per the Income Tax Act, certain deductions are available under the head-
Income from House Property. The deductions are-
- Municipal Tax
The actual municipal tax paid to Government authorities are available for deduction out of rental income from Gross Annual Value. This deduction is available subject to a maximum of rent paid. The deduction is available in the year in which actual payment is made.
- Deductions are also available under section 24 out of Net Annual Value (Net Annual Value=Gross annual value-municipal tax)
a. Standard Deduction Standard deduction is available at flat 30% of NAV irrespective of any expense incurred or not.
This flat rate has been decided as an allowance for repairs and other such expenses that the owner incurs during a year. However, this deduction is not allowed in cases where the gross annual value is nil,
which can be so in the case of a self-occupied property.
b. Deduction of interest on borrowed capital
Deduction of interest on borrowed capital is available on interest due on loan is taken for the purpose of repairs, reconstruction, acquisition or construction of house property. This deduction is available on accrual basis irrespective of actual payment made.
In the case of self-occupied property
The deduction limit is Rs. 30,000 where the loan is taken for repairs,
Further, if the loan is taken for acquisition or construction of house property, then the limit is Rs. 2,00,000.
In case of a property let out or deemed to be let out
No limit on the amount of deduction that can be obtained
regarding interest on borrowed capital.
Conditions to claim deduction u/s 24:
(i) A certificate has been obtained from the lender specifying the interest
(ii) Acquisition or construction of such property is completed within 5 years
from the end of the financial year in which the loan is taken.
Deductions from Net Asset Value: At a Glance