Deduction from income from house property

     The existing provisions contained in section 24 of the Act provide that income chargeable under the head “Income from house property” shall be computed after making certain deductions. Clause (b) of the said section provides that where the property is acquired with borrowed capital, the amount of any interest payable on such capital shall be allowed as deduction in computing the income from house property. The second proviso to clause (b) of the said section, inter-alia, provides that in case of selfoccupied property where the acquisition or construction of the property is completed within three years from the end of the financial year in which the capital is borrowed, the amount of deduction under that clause shall not exceed one lakh fifty thousand rupees.

     There has been appreciation in the value of house property and accordingly cost of finance has also gone up.

     Therefore, it is proposed to amend the second proviso to clause (b) of said section 24, so as to increase the limit of deduction on account of interest in respect of property referred to in sub-section (2) of section 23 to two lakh rupees.

     This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years.

[Clause 10]

Interest deduction cap for self-occupied house property increased, raising allowable interest deduction and applying from the specified assessment year. Amendment increases the allowable interest deduction for computing income from house property where the property is self-occupied and acquired or constructed with borrowed capital, raising the statutory ceiling on such interest deduction to a higher fixed limit to reflect increases in property values and financing costs, with prospective application to the assessment year following enactment and subsequent years.