Computation of Income under the head income or loss from house property –
Income Tax Department instructions on calculation of annual rental
value for the income tax deduction in respect of interest payable on
housing loan
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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)
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 houses property on interest on borrowed capital as under:-
the
deduction is allowed only in case of house property which is owned and
is in the occupation of the employee for his own residence. However,
if it is actually not 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.
(a)
The acquisition or construction of the house should be completed
within 3 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 or constructed (as reduced by any part of
interest allowed as deduction under any other section of the Act) shall
be deducted in equal installments for the FY in question and subsequent
four FYs.
