Income from House

Property
Deduction under Sec(24)
Interest on Borrowed Capital
Standard Deduction
Interest on Borrowed
Capital
Interest on borrowed capital is deductible as follows:
If the following conditions are satisfied
Interest on borrowed capital is deductible upto Rs
150,000. Capital is borrowed on or after April 1,
1999 for acquiring or constructing a property.
The acquisition/construction should be completed
within 3 years from the end of the financial year in
which capital was borrowed.
The person, extending the loan, certifies that such
interest is payable in respect of the amount
advanced for acquisition or construction of the
house or as refinance of the principle amount
outstanding under an earlier loan taken for such
acquisition or construction.
If the conditions stated above are not satisfied,
then the interest on borrowed capital is
deductible up to Rs 30,000. However, the
following conditions have to be fulfilled:
Capital is borrowed before April 1, 1999 for
purchase, construction, reconstruction repairs
or renewal of a house property.
Capital should be borrowed on or after April 1,
1999 for reconstruction, repairs or renewals of
a house property.
If the capital is borrowed on or after April 1,
1999, but construction is not completed within
3 years from the end of the year, in which
capital is borrowed.
Interest Deduction up to Rs.150000/- is available
only for acquisition and construction, provided
b) Loan taken on or after 1-4-1999 and
construction completed within 3 years from
the end of financial year in which loan is
borrowed.
c) For claiming deduction’s interest certificate
and details of principle outstanding, interest
amount etc. Along with the return on income.
Pre-Construction period
interest
Interest payable by an assessee in respect of
funds borrowed for property, deductible in FIVE
annual Installments starting from the year
previous prior to the year in which the
Construction/ Acquisition of such property was
completed or date of Repayment of loan
whichever is earlier.
Pre Construction period means period
commencing from the date of loan or
immediately preceding March 31st of the year
of completion whichever is earlier.
For Eg:
B takes a loan of Rs. 50,000/- @10% p.a., on
March 31st 2003, construction of the house is
completed on December 22nd, 2007, then Pre
Construction period is March 31st 2003 to
March 31st 2006, Interest value coming up to
Rs. 15,000/- deductible in 5 annual installments
of Rs. 3000/- each.
Post Construction period Interest: This is the
Interest paid by the assessee from the previous
year onwards in which Construction/ Acquisition
of the property is completed.
Standard Deduction
STANDARD DEDUCTION  allowable @ 30% of Net
Annual Value.
Municipal Taxes.
From GAV we have to deduct municipal
taxes(including service taxes) levied by any
authority in respect of House property.
Municipal Taxes are deductible only if
b) These taxes are borne by the owner.
c) And are actually paid by him during the
previous year.
Municipal taxes levied by local authority but not
paid by the assessee during the previous
year, are not deductible.
 Cont…
If the property is situated in foreign country,
municipal taxes levied by foreign authority are
deductible (if paid by the owner).
Amount paid by an assessee to a municipality for
regularisation of unauthorised construction is
not deductible.
Thank You