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Section 24(b) limit

Sonia (Auditor) (112 Points)

27 October 2012

As per section 24(b), In case of income from house property, deduction for interest on borrowed capital is allowed with a max limit of Rs. 1.5 lacs. However, I also read somewhere that

"Interest on borrowed capital is deductible fully without any maximum cieling (in case of let-out property)"

I am bit confused now, can someone please explain this to me, when is cieling applicable??

Thanks so much!

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6 Replies

Harish (CA Student) (568 Points)
Replied 27 October 2012

Hi

Ceiling Limits of Rs. 1,50,000 or Rs. 30,000 will be applicable in case of Self-Occupied Property. In case of Let-Out no limit is applicable for claiming 24 (b) deduction.

ANJALI NEGI (Chartered Accountant) (1263 Points)
Replied 27 October 2012

Deduction of Rs 1.5 lakhs max. is only in case of Self occupied property ...Agree with Harish..

Sonia (Auditor) (112 Points)
Replied 27 October 2012

Thanks so much Harish and Anjali. I have one more query.

My client has recently purchased a house, no plans to shift or rent it out for some time.

Will he be allowed Rs. 1.5 lacs deduction on Interest on borrowed capital. (since it will not be treated as self-occupied).

He is currently staying with his parents (thats in name of his father) and new house is only house in his name.

How can i suggest him to save tax liability??

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 27 October 2012

Dear you are talking about deduction of borrowings taken for construction of house which is self occupied.

here is details , hope it will clarify ur doubt-----

Maximum tax deduction for repayment principal component of home loan can't exceed Rs 1,00,000 under section 80C. One should keep in mind that other investments/contributions are also allowed as a deduction under section 80C, and this limit of Rs. 1,00,000 applies to all of them put together.
Housing loan interest deduction, on the other hand, is allowed up to a maximum amount of Rs 1,50,000 under section 24(b). However, the acquisition or construction of the house property should be completed within 3 years from the end of financial year in which home loan was taken; otherwise, the amount of interest benefit allowed is only up to Rs 30,000.
Furthermore, the above tax deduction limit u/s 24(b) is applicable only for self-occupied house property. In case of let-out or deemed to be let out house property, interest is deductible without any limit.

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