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:-
(i) 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.
(ii) the
quantum of deduction allowed as per table below:
|
Purpose of borrowing capital
|
Date of borrowing capital
|
Maximum Deduction allowable
|
|
Repair or renewal or
reconstruction of the house
|
Anytime
|
30000.00
|
|
Acquisition or construction
of the house
|
Before 01.04.1999
|
30000.00
|
|
Acquisition or construction
of the house
|
On or after 01.04.1999
|
Rs. 1,50,000/-
(upto AY 2014-15)
Rs. 2,00,000/-
(w. e. f. AY 2015-16)
|
(a)
The acquisition or construction of the house 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 upto 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.
(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 details
of Principal and Interest of the loan so repaid.
Adjustment for Excess or
Shortfall of Deduction:
The provisions of Section
192(3) allow the deductor to make adjustments for any excess or shortfall in
the deduction of tax already made during the financial year, in subsequent
deductions for that employee within that financial year itself.
Salary Paid in Foreign
Currency:
For the
purposes of deduction of tax on salary payable in foreign currency, the value
in rupees of such salary shall be calculated at the “Telegraphic transfer
buying rate” of such currency as on the date on which tax is required to be
deducted at source ( see Rule 26).
