Section 24(b) of the Act allows
deduction from income from house property on interest on borrowed capital as
under:-
(i) the
deduction is allowed only in case of house property which is owned and in the
occupation of the employee for his own residence. However, if it is not
actually occupied by the employee in view of his place of the employment being
at other place, his residence in that other place should not be in a building
belonging to him.
(ii) The
quantum of deduction allowed as per table below:
|
Sl. No
|
Purpose of borrowing capital
|
Date of borrowing capital
|
Maximum Deduction allowable
|
|
1
|
Repair or renewal or reconstruction of the house
|
Any time
|
Rs. 30,000/-
|
|
2
|
Acquisition or construction of the house
|
Before 01.04.1999
|
Rs. 30,000/-
|
|
3
|
Acquisition or construction of the house
|
On or after 01.04.1999
|
Rs. 1,50,000/-
|
In case of Serial No. 3 above
(a) The
house so acquired or constructed should be completed within3 years from the end
of the FY in which the capital was borrowed. Hence it is necessary for the DDO
to have the completion certificate of the house property against which
deduction is claimed either from the builder or through self-declaration from
the employee.
(b)
Further any prior period interest for the FYs up to the FY in which the
property was acquired and constructed shall be deducted in equal instalments
for the FY in question and subsequent four FYs.
(c) The
employee has to furnish before the DDO a certificate from the person to whom
any interest is payable on the borrowed capital specifying the amount of
interest payable. In case a new loan is taken to repay the earlier loan, then
the certificate should also show the comprehensive picture of Principal and
Interest of the loan so repaid.