TaxTMI 
TaxTMI 
Comparison of Section 22 "Deductions from income from house property" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)
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.... interest deduction where property falls u/s 21(6). Affected parties include taxpayers owning house property, lenders, and the tax department. Effective date or enactment date: Not stated in the document. Background & Scope Statutory hook: Clause/Section 22 dealing with "Deductions from income from house property" under the Income Tax Bill/Act, 2025. Both texts provide the quantum and nature of deductions allowed against "Income from house property" - the 30% deduction on annual value and deduction of interest where property was financed with borrowed capital. The documents include treatment of interest relating to periods prior to acquisition/construction, caps for properties referred to in section 21(6), certificate requirements, comput....
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....perties of the nature referred to in section 21(6) (two lakh rupees in old text; enacted text repeats Rs.200,000). * Non-allowance of interest payable outside India subject to conditions (tax not paid/deducted under Chapter XIX-B and absence of an agent in India per section 306). Interpretation The enacted text adds a cross-reference clarifying that the 30% deduction applies to "annual value as determined u/s 21", which can affect interpretive focus on the method of determining annual value. The placement of the rule allowing prior-period interest to be spread in five equal instalments is changed from the special-cases subsection in the Bill to a general subsection (1)(c) in the enacted text. This suggests a legislative decision to fore....
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....riod (Year 0-Year 1) would, according to the enacted text, be allowable as deduction in five equal instalments beginning the tax year of acquisition. (This is an illustrative application of sub-section (1)(c); precise amounts are Not stated in the document.) * Example 2 (caps): A property falling u/s 21(6) acquired with borrowed capital satisfying the five-year completion condition and supported by the required certificate: aggregate deduction for interest under the relevant provision cannot exceed Rs.200,000. (Quantification beyond the cap is Not stated in the document.) Interplay Both texts cross-reference section 21 (annual value) and section 306 (agent in India) and Chapter XIX-B (tax on interest payable outside India). No other s....
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..... Sub-section (5): same rule but expressed as "shall not exceed Rs. 200000." Drafting/wording Uses words like "two lakh rupees" and places the five-instalment rule inside the cap conditions. Uses numerals "Rs. 200000", reorganises the five-instalment rule as part of primary computation and clarifies cross-reference to section 21 for annual value. Practical impact of each change: * Movement of the five-instalment rule to a primary subsection (1)(c): This elevates the spreading mechanism to a general part of income computation for house property where borrowing predates acquisition/ construction. Practically, it reduces the risk that the spreading rule will be read as limited to only those cases qualifying for the Rs.200,000 cap (a....
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....)(c)). The requirement to furnish a certificate from the person to whom interest is payable remains necessary where the higher cap is claimed. * Record-keeping: Retain documentary evidence of dates of borrowing and dates of acquisition/construction, interest certificates from lenders specifying amounts and any subsequent loan details (as required by sub-section (4)). * Computation: When spreading prior-period interest, reduce the deductible amount by any interest allowed under any other provision of the Act (per enacted sub-section (3)). * Cross-border interest: Interest payable outside India will be disallowed if tax was not paid/deducted under Chapter XIX-B and there is no agent in India per section 306 - taxpayers with foreign lend....