Just a moment...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ----
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
RelevanceDefaultDate
    Act RulesIncome Tax
    Comparison of Section 41 "Written down value of depreciable asset" between the Income-Tax Act, 2025 ...
    Act RulesIncome Tax
    Comparison of Section 40 "Special provision for computation of cost of acquisition of certain assets...
    Act RulesIncome Tax
    Comparison of Section 39 "Computation of actual cost" between the Income-Tax Act, 2025 (as passed) a...
    Act RulesIncome Tax
    Comparison of Section 38 "Certain sums deemed as profits and gains of business or profession" betwee...
    Act RulesIncome Tax
    Comparison of Section 37 "Certain deductions allowed on actual payment basis only" between the Incom...
    Act RulesIncome Tax
    Comparison of Section 36 "Expenses or payments not deductible in certain circumstances" between the ...
    Act RulesIncome Tax
    Comparison of Section 35 "Amounts not deductible in certain circumstances" between the Income-Tax Ac...
    Act RulesIncome Tax
    Comparison of Section 33 "Deduction for depreciation" between the Income-Tax Act, 2025 (as passed) a...
    Act RulesIncome Tax
    Comparison of Section 32 "Other deductions" between the Income-Tax Act, 2025 (as passed) and the Inc...
    Act RulesIncome Tax
    Comparison of Section 31 "Deduction for bad debt and provision for bad and doubtful debt" between th...
    Act RulesIncome Tax
    Comparison of Section 29 "Deductions related to employee welfare" between the Income-Tax Act, 2025 (...
    Act RulesIncome Tax
    Comparison of Section 28 "Rent, rates, taxes, repairs and insurance" between the Income-Tax Act, 202...
    Act RulesIncome Tax
    Comparison of Section 26 "Income under head Profits and gains of business or profession" between the...
    Act RulesIncome Tax
    Comparison of Section 25 "Interpretation" between the Income-Tax Act, 2025 (as passed) and the Incom...
    Act RulesIncome Tax
    Comparison of Section 23 "Arrears of rent and unrealised rent received subsequently" between the Inc...
    Act RulesIncome Tax
    Comparison of Section 22 "Deductions from income from house property" between the Income-Tax Act, 20...
    Act RulesIncome Tax
    Comparison of Section 21 "Determination of annual value" between the Income-Tax Act, 2025 (as passed...
    Act RulesIncome Tax
    Comparison of Section 19 "Deductions from salaries" between the Income-Tax Act, 2025 (as passed) and...
    Act RulesIncome Tax
    Comparison of Section 17 "Perquisite" between the Income-Tax Act, 2025 (as passed) and the Income-Ta...
    Act RulesIncome Tax
    Comparison of Section 11 "Incomes not included in total income" between the Income-Tax Act, 2025 (as...
❯❯
MaximizeMaximizeMaximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

    +

    Are you sure you want to delete "My most important" ?

    NOTE:

    Notes
    Showing Results for :
    Reset Filters
    Results Found:
    Show All SummariesHide All Summaries
    Act RulesIncome Tax
    Show AI Summary
    Written down value rules: formulaic WDV computation and continuity across specified corporate transfers ensure consistent depreciation treatment.
    Computation of written down value uses three treatments: actual cost for assets acquired in the year; actual cost less depreciation actually allowed for assets acquired earlier; and block computation by [(A - D) + B - C] - E with statutory caps. The provision maps WDV/actual-cost continuity across specified corporate transfers (holding/subsidiary, amalgamation, demerger, LLP conversion, corporatisation), deems carried-forward depreciation to be depreciation actually allowed, and requires revaluation/book-depreciation adjustments where earlier years lacked tax computation.
    Act RulesIncome Tax
    Show AI Summary
    Cost of acquisition continuity: transferee inherits transferor's cost plus improvements and transfer expenses for stock-in-trade sales.
    When an asset received on amalgamation, by gift, will, irrevocable trust, or HUF partition is sold as stock-in-trade, the transferee's cost of acquisition is the sum of the transferor's original cost, any cost of improvement, and any expenditure incurred by the transferor or amalgamating company wholly and exclusively in connection with the transfer; certain assets are excluded by separate statutory provision and no alternative valuation or evidentiary rules are provided.
    Act RulesIncome Tax
    Show AI Summary
    Computation of actual cost: adjustments for third party funding and input tax credits limit depreciable base.
    Section 39 defines actual cost for assets used in business or profession as the assessee's cost reduced by amounts borne by another person, GST/input tax credits where claimed and allowed, excise/additional customs duty credits where claimed and allowed, and any subsidy, grant or reimbursement relatable to acquisition; it excludes payments made outside prescribed banking/online modes beyond the daily threshold and prescribes a formula to apportion non asset specific subsidies across assets.
    Act RulesIncome Tax
    Show AI Summary
    Recapture of previously claimed deductions: reversals, recoveries and asset disposals treated as business income under tax law.
    Certain receipts are deemed profits and gains where they reverse or offset earlier deductions or allowances: remission or cessation of trading liabilities; gains on disposal of tangible assets where proceeds plus scrap value exceed written down value; sale of research capital assets sold without other use where proceeds plus prior deductions exceed capital expenditure; recoveries of bad debts previously deducted; and withdrawals from special reserves previously deducted. Applicability requires that the earlier allowance was made in assessment, assets were used for business or profession with depreciation claimed and allowed, and research assets were not used for other purposes; successors in business are within scope.
    Act RulesIncome Tax
    Show AI Summary
    Actual-payment rule: deductions are taxable only when actually paid, with narrow early-payment carve-outs and contractual limits.
    Section 37 makes specified business deductions allowable only in the tax year in which they are actually paid, regardless of accounting method or when liability arose. Enumerated categories include statutory levies, employer fund contributions, leave-in-lieu payments, amounts referred to section 32(a), interest on loans/advances/borrowings from specified financial entities, payments to Indian Railways, and late payments to micro and small enterprises; limited exceptions permit earlier-year deduction if paid by the return filing due date (excluding MSME payments), and conversion of interest into deferred instruments is not treated as payment.
    Act RulesIncome Tax
    Show AI Summary
    Restrictions on deductions for related party payments require arm's length pricing and specified electronic payment modes for eligibility.
    Section 36 empowers the Assessing Officer to disallow payments to specified persons that are excessive or unreasonable relative to fair market value, legitimate business needs, or benefit to the assessee; defines specified persons and a 20% substantial interest test; prohibits deductibility of aggregate cash payments in a day above prescribed thresholds unless made through specified banking/online modes (with a higher threshold for carriage services); treats subsequent cash payments as business income where deduction had been earlier allowed; and adds an exclusion for marked to market or expected losses except as expressly allowable.
    Act RulesIncome Tax
    Show AI Summary
    Non-deductibility for unpaid withholding taxes: deductions denied until the required tax or equalisation levy is paid.
    Section 35 conditions deduction of business or professional expenses on compliance with withholding and levy obligations: where tax or equalisation levy required to be deducted or paid is not timely deducted/paid, a specified portion of the payment is disallowed in the year of non-compliance and is allowed only in the year when the tax or levy is actually deducted and paid; parallel deeming rules and provisos address later deduction/payment and certain default scenarios, while partnership and association rules restrict deduction for unauthorised or excessive partner/member remuneration and interest.
    Act RulesIncome Tax
    Show AI Summary
    Deduction for depreciation: statutory framework limits and special incentives for qualifying business assets under the tax code.
    Section 33 provides for deduction for depreciation on tangible and specified intangible assets used wholly and exclusively for business or profession, excluding goodwill; it prescribes computation by blocks and prescribed rates, applies special rules for power undertakings and leasehold improvements, imposes a 50% restriction for assets first used less than 180 days, allows an additional first-year deduction for qualifying new plant and machinery subject to strict conditions, and prescribes pro rata allocation and ceilings on claims in succession, amalgamation or demerger with carry-forward rules for unallowed depreciation.
    Act RulesIncome Tax
    Show AI Summary
    Other deductions for business income clarified: special reserve caps, temporal interest disallowance, and prescribed mark to market rules apply.
    Clause 32 lists allowable other deductions for business income, including employee bonuses, interest on borrowings subject to temporal disallowance until asset is first put to use, contributions to notified guarantee funds, prescribed pro rata discount on zero coupon bonds, a capped special reserve for specified entities tied to eligible business profits and capital/reserve limits, notified non-capital expenditures by statutory corporations, co-operative sugar purchase support, marked-to-market or expected losses computed under prescribed standards, phased deductions for family planning capital expenditure, loss on animals, and payment of transaction taxes where business income arises.
    Act RulesIncome Tax
    Show AI Summary
    Provision for bad debts limits deductions for financial entities and ties write-off claims to provision account debits.
    Section 31 separates a capped, percentage-based deduction for provisions for bad and doubtful debts available to specified financial assessees from separate deductibility of actual irrecoverable debts. Written-off debts are deductible only if previously taken into account for income computation or advanced in the ordinary course of business; for those claiming the percentage provision the deduction is limited to amounts exceeding the provision account credit and is permitted only where the relevant bad debt or part thereof has been debited to the single provision account in the tax year.
    Act RulesIncome Tax
    Show AI Summary
    Deductibility of gratuity provisions clarified: certain gratuity provisions deductible despite a general prohibition, with anti double deduction rule.
    Section 29 permits employer deductions for specified employee welfare payments: recognised provident and approved superannuation contributions subject to prescribed limits and Board conditions; pension scheme contributions subject to a statutory ceiling with a defined salary concept; contributions to approved gratuity funds held in irrevocable trust; provisions for contributions to such gratuity funds or for payment of gratuity that has become payable during the tax year; and employee contributions credited by the prescribed due date. The As Passed text clarifies that the allowance for certain gratuity provisions operates notwithstanding the general disallowance on provisions, and prevents a second deduction on actual payments where a provision deduction was already claimed.
    Act RulesIncome Tax
    Show AI Summary
    Deductions for business asset expenses broadened where used for business, subject to apportionment and capital expenditure classification.
    Allowable deductions for business or professional profits include insurance premiums, land revenue/local rates/municipal taxes, rent for premises occupied as a tenant, current repairs to premises when not a tenant, and cost of repairs where a tenant has undertaken to bear repair costs. Expenditure in the nature of capital expenditure is excluded. Where assets are partly used for business, deduction is restricted to a fair proportionate part as determined by the Assessing Officer. The Passed Act broadens use-based entitlement and expressly permits repairs to machinery, plant and furniture.
    Act RulesIncome Tax
    Show AI Summary
    Business income inclusion expanded to capture specified receipts and broadened recapture for assets with previously allowed capital allowances.
    Section 26 charges income under the head Profits and gains of business or profession by an inclusive list that captures receipts such as compensation for termination or modification of management/agency/contract, profits on sale of import licences and export incentives, partner remuneration, sums for non competition or withholding of know how, Keyman insurance proceeds, fair market value on inventory treated as capital asset, and recapture receipts where whole expenditure was previously allowed as a deduction under specified statutory provisions.
    Act RulesIncome Tax
    Show AI Summary
    Owner definition expanded to include transfers without adequate consideration and long-term rights, widening house-property tax reach.
    For the purposes of sections 20-24 (income from house property), the provision inclusively defines owner to cover persons who transfer property without adequate consideration to specified relatives (subject to an agreement to live apart exception), holders of impartible estates (deemed individual owners for all properties in the estate), cooperative society allottees or lessees under house-building schemes, persons in possession under section 53A part-performance arrangements, and persons acquiring long-term or enabling rights in property; leases of month-to-month or not exceeding one year are excluded from clause (e).
    Act RulesIncome Tax
    Show AI Summary
    Taxation of arrears of rent: treat receipts as house property income in year of receipt with a standard deduction.
    Arrears of rent and unrealised rent realised subsequently are deemed income from house property in the year of receipt or realisation, included in total income irrespective of the recipient's ownership status in that year, with a prescribed deduction equal to 30% of the amount received.
    Act RulesIncome Tax
    Show AI Summary
    Deduction from house property: 30% standard deduction and spreadable pre acquisition interest with capped interest relief.
    Deductions for Income from House Property allow a 30% standard deduction on annual value (as determined under section 21) and interest on borrowed capital for acquisition/construction; pre acquisition interest is spread in five equal instalments beginning in the year of acquisition/construction, spread amounts must be reduced by interest already allowed under other provisions, and capped aggregate interest deductions apply with certificate and completion conditions, while interest payable outside India is disallowed unless appropriate tax withholding or agent arrangements exist.
    Act RulesIncome Tax
    Show AI Summary
    Determination of annual value: higher of expected or actual rent, with narrowed vacancy test and specific exemptions.
    Annual value is the higher of expected rent or actual rent received/receivable where let; the enacted text narrows vacancy relief by requiring that vacancy-related reduction make actual rent lower than the notional expected rent before annual value is fixed at actual receipts. Local taxes actually paid reduce annual value, unrealised rent is excluded subject to rules, stock-in-trade newly completed and not let enjoys two years nil annual value upon completion certificate, and owner-occupation yields nil annual value for up to two specified houses unless let or other benefits are derived.
    Act RulesIncome Tax
    Show AI Summary
    Deductions from salaries: defined categories, formulaic computation and aggregation limits govern tax relief eligibility.
    Section 19 itemises fourteen categories of salary related receipts that are deductible or exempt and prescribes formulas, ceilings and conditions for each. Relief for gratuity, leave encashment, pension commutation, retrenchment and voluntary retirement is computed by statutory formulas or by reference to notified limits and other enactments; an aggregation rule limits cumulative exemption where multiple receipts occur. The provision depends on cross references to other statutes and notifications, requiring classification, documentary evidence and tracing of prior exemptions to determine allowable deductions.
    Act RulesIncome Tax
    Show AI Summary
    Perquisite taxation: employer-provided benefits and securities treated as taxable salary components, with limited exclusions and prescribed valuation.
    Section 17 defines perquisite for salary taxation by listing employer-provided benefits treated as perquisites-including accommodation, employer-paid obligations, securities and sweat equity allotted or transferred at concessional rates, employer-paid insurance premiums and excess retirement contributions-while excluding certain employer-funded medical treatment, approved insurance arrangements, commuting vehicle expenditure and conditional foreign medical/travel payments; valuation methods and thresholds are delegated to subordinate rules and cross-references link perquisite treatment to existing constructs for gross total income and approved fund schemes.
    Act RulesIncome Tax
    Show AI Summary
    Conditional exclusion from total income: schedule-based incomes and persons excluded if conditions met; otherwise included in tax base.
    A conditional exclusion regime provides that incomes in Schedules II-VI and persons in Schedule VII are excluded from total income only if schedule conditions are satisfied; failure to satisfy conditions results in inclusion of such income in total income and taxation for the relevant tax year, and the Central Government is empowered to make rules or notifications to operationalise those schedules.

    TMI Notes

    Back

    All TMI Notes

    Showing Results for :
    Reset Filters
      No Records Found

      TMI Notes

      Back

      All TMI Notes

      whatsappJoin Channel
      Showing Results for : Reset Filters

      Promoting Affordable Housing through deduction in respect of interest on loans : Clause 130 of the Income Tax bill, 2025 Vs. Section 80EE of the income Tax Act, 1961

      16 April, 2025

      Contents
      Acts
      Rules & Regulations
      Summary
      Note

      Note

      -

      Bookmark

      Print

      Print

      Clause 130 Deduction in respect of interest on loan taken for residential house property.

      Income Tax Bill, 2025

      Introduction

      Clause 130 of the Income Tax Bill, 2025, is a statutory provision that addresses the deduction in respect of interest on loans taken for residential house property. This clause is part of a broader legislative framework aimed at providing tax relief to individuals investing in residential properties. The significance of this provision lies in its potential to encourage home ownership by offering financial incentives through tax deductions. It aligns with the government's policy objectives of promoting affordable housing and supporting the real estate sector. The provision is designed to ease the financial burden of interest payments on home loans, thereby making home ownership more accessible to individuals.

      Objective and Purpose

      The primary objective of Clause 130 is to provide a tax deduction on interest paid on loans taken for acquiring residential house property. The legislative intent behind this provision is to incentivize individuals to invest in residential properties by reducing the effective cost of borrowing. It reflects a policy consideration to promote housing as a fundamental need and a key component of economic development. Historically, similar provisions have been introduced to stimulate the housing market, boost construction activity, and provide a fillip to related industries. By offering tax benefits, the government aims to make housing more affordable and accessible, particularly for first-time homebuyers.

      Detailed Analysis of Clause 130 of the Income Tax Bill, 2025

      1. Eligibility and Scope: Clause 130 applies to individuals who have taken loans from financial institutions for the purpose of acquiring residential house property. The term "financial institution" is defined to include banking companies, banks, or housing finance companies registered in India. This broad definition ensures that a wide range of lending institutions are covered, thereby providing flexibility to borrowers.

      2. Quantum of Deduction: The clause allows a deduction of up to fifty thousand rupees on the interest payable on such loans. This deduction is available in computing the total income of the individual for the tax year beginning on April 1, 2016, and subsequent years. The fixed cap on the deduction ensures that the benefit is targeted towards individuals with moderate loan amounts, aligning with the objective of promoting affordable housing.

      3. Conditions for Deduction: Several conditions must be met for an individual to claim this deduction:

      - The loan must have been sanctioned between April 1, 2016, and March 31, 2017.

      - The loan amount sanctioned should not exceed thirty-five lakh rupees.

      - The value of the residential house property should not exceed fifty lakh rupees.

      - The assessee must not own any residential house property on the date of sanction of the loan. These conditions ensure that the benefit is primarily targeted at first-time homebuyers and those purchasing affordable housing. The specific timelines and monetary limits reflect a targeted approach to stimulate housing in a particular economic context.

      4. Exclusivity of Deduction: The clause specifies that if a deduction is claimed under this section, it cannot be claimed under any other provision of the Income Tax Act for the same or any other tax year. This exclusivity clause prevents double-dipping and ensures that the tax benefit is availed only once for a specific loan.

      5. Definitions: The clause provides clear definitions for "financial institution" and "housing finance company," ensuring clarity and reducing potential ambiguities in interpretation. These definitions are aligned with existing legal frameworks, such as the Banking Regulation Act, 1949, ensuring consistency across statutes.

      Comparative Analysis with Section 80EE of the Income Tax Act, 1961

      1. Eligibility and Scope: Both Clause 130 and Section 80EE apply to individuals taking loans from financial institutions for acquiring residential properties. The scope and definitions of financial institutions are consistent across both provisions, ensuring continuity in application.

      2. Quantum of Deduction: The deduction limit of fifty thousand rupees is identical in both provisions, maintaining consistency in the quantum of tax relief offered to individuals.

      3. Conditions for Deduction: The conditions under Clause 130 mirror those in Section 80EE, with specific timelines for loan sanctioning and limits on loan amounts and property values. Both provisions target first-time homebuyers and affordable housing, ensuring that the benefits are directed towards the intended demographic.

      4. Exclusivity of Deduction: The exclusivity clause is a common feature in both provisions, preventing double claims of tax benefits across different sections of the Income Tax Act.

      5. Historical Context and Evolution: Section 80EE was introduced as part of the Finance Act, 2013, and has undergone amendments to align with changing economic contexts. Clause 130 continues this legislative trend, reflecting evolving policy priorities and economic conditions.

      Practical Implications

      The practical implications of Clause 130 are significant for various stakeholders:

      - Individuals: For individual taxpayers, this provision offers a direct financial benefit by reducing taxable income through interest deductions. It lowers the overall cost of borrowing, making home ownership more financially viable.

      - Real Estate Sector: By promoting home ownership, the provision indirectly supports the real estate sector, leading to increased demand for residential properties. This can stimulate construction activity and related industries, contributing to economic growth.

      - Financial Institutions: The provision may lead to increased demand for home loans, benefiting banks and housing finance companies. It encourages financial institutions to design loan products that cater to the needs of first-time homebuyers.

      - Government and Policy Makers: For the government, this provision aligns with broader policy objectives of promoting affordable housing and economic development. It provides a fiscal tool to influence housing market dynamics and support economic growth.

      Conclusion

      Clause 130 of the Income Tax Bill, 2025, is a well-structured provision aimed at promoting home ownership through tax incentives. Its alignment with Section 80EE of the Income Tax Act, 1961, ensures consistency in legislative intent and application. The provision's focus on first-time homebuyers and affordable housing reflects broader policy objectives of economic growth and social welfare. While the provision offers significant benefits, potential areas for reform could include adjustments to deduction limits and conditions to reflect changing economic realities and housing market dynamics.


      Full Text:

      Clause 130 Deduction in respect of interest on loan taken for residential house property.

      Topics

      ActsIncome Tax