Computation of Income from House Property

Thursday, October 11, 2012 | comments

Computation of income under the head "Income from house property":
While taking into account the loss from House Property, the DDO shall ensure that the employee files the declaration referred to above and encloses therewith a computation of such loss from House Property. Following details shall be obtained and kept by the employer in respect of loss claimed under the head "Income from house property" separately for each house property:
(a)  Gross annual rent/value
(b)  Municipal Taxes paid, if any
(c)  Deduction claimed for interest paid, if any
(d)  Other deductions claimed
(e)  Address of the property
(f)  Amount of loan, if any; and
(g)  Name and address of the lender (loan provider)
3.7.1 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 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
Repair or renewal or reconstruction of the house
Any time
Rs. 30,000/-
Acquisition or construction of the house
Before 01.04.1999
Rs. 30,000/-
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.
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