Deductions from annual value [section 24]

Deductions from annual value [section 24]

Buying a home is one of the most common long-term investment goals for most of us. Home loans makes this dream easy for us. These days people apply for home loans and prefer to repay the same through EMIs. So, the government has given tax benefits in case where you have taken home loans for house property under various sections of the Income Tax Act.

 

Deductions under Section 24(a) & 24(b)

There are two deductions from annual value:

  1. 30% of NAV;
  2. Interest on Borrowed capital

 

 

Deduction under Section 80EE – Click here

 

Deduction under Section 80EEA – Click Here

 

What is Pre-construction period?

Pre-construction period is the period prior to the previous year in which property is acquired or construction is completed.

 

Interest on Borrowed capital paid during pre-construction period

Any interest paid during the pre-construction period shall be allowed as a deduction equally in 5 consecutive years starting from the previous year in which the possession of property was acquired or construction was completed.

 

Inadmissible Deductions [Section 25]

Interest Chargeable under this act which is payable outside India shall not be deducted if the following conditions prevail:

  • Tax has not been paid or deducted from such interest and;
  • In respect of which there is no problem in India who may be treated as an agent.

 

Disclaimer: The above-mentioned cases are illustrative and not exhaustive. This article is only for discussing general issues and hereby we do not express any opinion or give any consultation in what so ever manner understood. The cases may differ from assessee to assessee. We recommend you to take expert advice depending upon your particular case.

 

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