Income from House Property

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Srinivasa Rao (Querist)
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07 March 2009 I have two houses. One is vacant and other is let out. I had taken loan from bank for the purpose of acquiring both the properties. I am claiming interest expense as deduction for first house, subject to max. limit of Rs.1.5 lacs p.a. Can i claim interest as deduction for second house? If so, is there any limit? Can the loss under second property be set off against salary income. Pl. clarify. Thanks. Rgds, Srinivas

CA.SHAHZAD SAYYED

CA.SHAHZAD SAYYED (Expert)
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07 March 2009 Vacant House shall be treated as Deemed Let Out and hence you are eligible for Interest Deduction u/s 24(b) for actual interest paid
similarly the Actual Let out House is Also Eligible for Dedustion,
The limit of 1.5 Lac is only for Self occupied House there is no limit for interest paid on Let out houses
Only Loss from Business & Profession can not Set-off against Salary Income u/s 71 therefor you can set-off the HP Loss Against Salary Income u/s 71

Srinivasa Rao

Srinivasa Rao (Querist)
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07 March 2009 Thanks for clarification.

Can the loss under second property (let out) be adjusted against salary income by the employer at the time of deducting TDS? Pl. clarify.

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Asha Kanta Sharma online

Asha Kanta Sharma

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29 July 2024 In India, losses from one source of income can generally be set off against income from another source within the same head of income, or carried forward to future years, subject to specific conditions. Here's a detailed explanation regarding the adjustment of losses from a property against salary income, particularly in the context of TDS (Tax Deducted at Source):

### Loss from Let-Out Property and TDS on Salary

1. **Setting Off Losses**:
- **Loss from Let-Out Property**:
- Losses from the letting out of a property (under the head "Income from House Property") can be set off against income from any other source under the same head or carried forward to future years.
- As per Section 24(b) of the Income Tax Act, you can claim a loss up to ₹2 lakh in a financial year, with any remaining loss carried forward to the next year.

- **Income from Salary**:
- Salary income falls under a different head of income compared to income from house property.

2. **Adjustment of Losses**:
- **Internal Adjustment**:
- **Within Tax Return**: Losses from house property can be set off against other heads of income, including salary, when filing the income tax return (ITR). This adjustment will be done while computing the total taxable income for the year.
- **Employer's Role**: The employer does not have the authority to adjust losses from house property against salary income while calculating TDS. TDS is deducted based on the income declared by the employee, which is usually on a gross basis and does not account for personal adjustments or deductions.

- **Tax Filing**:
- **Income Tax Return**: You need to declare your total income, including income from salary and income from house property, and claim the loss adjustment when you file your ITR.
- **Carry Forward**: If the total loss from house property exceeds the ₹2 lakh limit, the excess loss can be carried forward to subsequent years.

### Steps to Handle Losses from Let-Out Property:

1. **Calculate the Loss**:
- Determine the loss from house property as per the provisions of Section 24(b) of the Income Tax Act. This includes interest on housing loans and other permissible deductions.

2. **Include in ITR**:
- When filing the ITR, include the loss from house property and adjust it against other income, including salary income, as per the computation rules provided in the Income Tax Act.

3. **Informing Employer**:
- While the employer will not adjust the loss while deducting TDS, you can provide them with an updated declaration of income if it impacts your overall tax liability. However, this is not mandatory for TDS adjustments.

4. **Final Tax Computation**:
- Your final tax liability, including any loss adjustments, will be computed when you file your tax return. The excess tax or refund due will be adjusted accordingly.

### Summary

- **Loss from Let-Out Property** cannot be adjusted against salary income directly by the employer while calculating TDS.
- You need to handle this adjustment when filing your Income Tax Return.
- The employer will deduct TDS based on the declared salary and not take into account personal adjustments like property losses.
- After filing your return, you will reconcile and settle any excess tax or refunds due based on the final computation of income and losses.

If you need further assistance, particularly with complex tax computations or adjustments, consulting a tax professional or advisor may be beneficial.