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Section 24: income tax benefit on interest on home loan

Brij (MBA) (25 Points)

06 August 2015

Section 24 allows Income Tax Benefit on Interest on Home Loan provided the house is not under construction and should have been completed within 3 years of taking home loan. It can also be claimed on accrual basis i.e. interest paid for the years it was under construction can be claimed on possession, in subsequent five yrs in equal parts. But I am not able to identify this provision in either ITR 1 or ITR 2 for AY 15-16. I need to claim interest rebate for the FY 2013-14. Please advise.

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Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 06 August 2015

In ITr 1 in row 42 select self occupied and put negative interest value in outer column

In ITR 2, in sheet House property, enter address details, select self occupied in row 11, and enter interest value in row 23. The rows may slightly vary in subsequent versions of the utility.

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Brij (MBA) (25 Points)
Replied 06 August 2015

Originally posted by : Rajagopalakrishnan R
	In ITr 1 in row 42 select self occupied and put negative interest value in outer column In ITR 2, in sheet House property, enter address details, select self occupied in row 11, and enter interest value in row 23. The rows may slightly vary in subsequent versions of the utility.

Dear Mr Rajagopalakrishnan R

thanks for the prompt reply. However my ques is still unanswered. Both the entries you mentioned cater for the current AY requirement and do not allow deduction of more than 2 lakh by default for a self occupied house. In my case my interest for current AY 15-16 on home loan already exceeds 2 lakhs. My requirement is to claim in addition deduction of previous AY 14-15 tax paid on home loan. Although there is a provision in ITR 2 under the head 'Schedule CFL' to fill in losses on house property of previous AY; but despite filling this amount, it does not get deducted neither in part or fully from the total taxable income anywhere in the ITR 2 Form. What wrong am I doing?

Z ( ) (2960 Points)
Replied 06 August 2015

Deduction in case of self occupied house is restricted to 200,000 only

Schedule CFL is for carry forward of loss, this is different

There was deduction u/s 80EE and it would be applicable if

" the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;" [See below for more details]

S24. Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:—

(a) a sum equal to thirty per cent of the annual value;

(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:

Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees :

Provided further that where the property referred to in the first proviso [SELF OCCUPIED/ DEEMED TO BE SELF OCCUPIED] is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed within three years from the end of the financial year in which capital was borrowed, the amount of deduction under this clause shall not exceed two lakh rupees

80EE. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.

(2) The deduction under sub-section (1) shall not exceed one lakh rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2014 and in a case where the interest payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be allowed in the assessment year beginning on the 1st day of April, 2015.

(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—

(i) the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;

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

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

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

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