Deductions relating to Housing Loan (P.Y2016-17 /A.Y.2017-18)

Related Income tax provisions: Sec 24; Sec 80C & sec 80 EE

Sec 24: Deductions from Income from House Property

This section deals with the interest portion of the loan repaid by the assesses relating to house property.

·         Self Occupied Property.

A.      Where the property has been repaired, renewed or reconstructed with borrowed capital, the maximum amount of deduction is Rs 30,000.

B.       Where the property is acquired or constructed with capital borrowed, the amount of deduction is Rs 2,00,000 or actual expenditure  w.e.l., subject to the following conditions

v  Loan borrowed on or after the 1st day of April, 1999 and

v  Acquisition or construction is completed within five years from the end of the financial year in which capital was borrowed

Notes

1.In case of prior period interest (ie prior to the previous year in which the property has been acquired or constructed), the same will be divided into 5 equal installments and a portion of the same can be claimed in each year starting from year in which the house property is completed or acquired.

2. The assesses has to furnish a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable with respect to such acquisition or construction of the property so as to avail the deduction.

·         Let out/ Other than self occupied property:

The whole amount of interest incurred is deductible

Sec 80C: Principal repayment deductions from Total Income

 The total amount of deduction available under this section is 1, 50,000. This article deals with only the principal repayment.

The amount deductible u/s 80C includes:-

(a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

(b) any installment or part payment of the amount due to any company or co-operative society of which the assesses is a shareholder or member towards the cost of the house property allotted to him; or

(c) repayment of the amount borrowed by the assesses from—

ü  the Central Government or any State Government, or

ü  any bank, including a co-operative bank, or

ü  the Life Insurance Corporation, or

ü  the National Housing Bank, or

ü  any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes

ü  any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

ü  the assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

ü  the assessee’s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society; or

(d) stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee,

but shall not include any payment towards or by way of—

Ø  the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or

Ø  the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or

Ø  any expenditure in respect of which deduction is allowable under the provisions of section 24;

 

Sec 80EE: Principal repayment deductions from Total Income( As amented by Finance Act 2016)

This deduction is over and above the deductions available under section 80C.

Interest payable on loan taken by an individual from any financial institution for the purpose of acquisition of a residential house property is deductible subject to certain condition. (Maximum deduction 50,000).

Criteria:

(i)  the loan has been sanctioned by the financial institution between 1st day of April, 2016 and 31st day of March, 2017;

(ii)   the amount of loan sanctioned for acquisition of the residential house property does not  exceed 35 lakh rupees;

(iii)  the value of residential house property does not exceed 50 lakh rupees;

(iv) the assessee does not own any residential house property on the date of sanction of loan.