Income Tax :- Deduction of interest on Borrowed Capital for Housing purpose u/s 24(b) from Salary

Friends,    Income Tax Department has issued Circular No. 8/2013, dated 10.10.2013 regarding Income Tax Deduction from Salaries during the Financial Year 2013-14 under section 192 of the Income Tax Act, 1961.   It has been observed that some relaxation has been given by Income Tax Department for getting claim of deduction of Interest on Borrowed Capital for Computation of Income from House Property under section 24(b) i.e.  completion certificate either from the builder or through self-declaration  of the employee is sufficient for DDO, means their is no need of completion certification issued by competent authority.  The detailed information is given below regarding claim of Deduction of Interest on Borrowed Capital for computation of Income fro House Property u/s 24(b) in the interest of Assessee :-

Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property Section 24(b): 

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:- 

(i) the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not 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: 

In case of Serial No. 3 above 

(a) The acquisition or constructing of the house should be completed within 3 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 upto the FY in which the property was acquired and constructed shall be deducted in equal installments 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 details of Principal and Interest of the loan so repaid.

Download Complete Circular No. 8/2013 dated 10.10.2013 

Salary :- Deduction of Interest on Loan for House Property

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.