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Tax exemption limit on interest on housing loan.

Soumya (Senior Accounts Executive) (235 Points)

22 June 2016

Dear All,

Please tell me what is the limit amount for tax exemption under Interest on Home Loan.

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8 Replies

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 22 June 2016

As per section 24(b)-where the property referred to in the first proviso of section 24 is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed within 3 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.

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Kuldipsinh Jadeja (Job) (357 Points)
Replied 22 June 2016

Deduction of interest u/s 24(b) of Income Tax Act is limited to following amount :

For Let out property/Deemed let out property - No Maximum Limit
For Self occupied property - Rs.2,00,000/-

In the following cases the above limit of Rs 2,00,000 for SOP shall be reduced to Rs. 30,000

Loan borrowed before 01-04-1999 for any purpose related to house property.
Loan borrowed after 01-04-1999 for any purpose other than construction or acquisition.
If construction/acquisition is not completed within 5 years from the end of the financial year (3 years till financial year 2015-16) in which capital was borrowed. For example, a loan is obtained for construction/acquisition on 28 Oct 2011 then the deduction limit should reduced to Rs 30,000 if the construction/acquisition completes after 31 March 2017

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subhash kumar jha (PROFESSION) (445 Points)
Replied 22 June 2016

Not tax exemption but its deduction under section 24b i.e.2,00,000 in case of self occupied property and not limited for other property.

Rammi_RP Rawat (Accountant ) (386 Points)
Replied 22 June 2016

The maximum tax deduction allowed under Section 24 of a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs (increased in Budget 2014 from 1.5 Lakhs to Rs. 2 Lakhs).

subhash kumar jha (PROFESSION) (445 Points)
Replied 22 June 2016

As Mr harshal Totla g said three year , that has been increased to five year w.e.f. assessment year 2017-18.

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CA Bhart Porwal (Self Practice as Partner ) (51 Points)
Replied 22 June 2016

Dear Somya

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 property.

(2) The deduction under sub-section (1) shall not exceed fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2017 and subsequent assessment years.

(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, 2016 and ending on the 31st day of March, 2017;

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

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

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

(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year

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ritesh patel (SR.ACCOUNTANT) (69 Points)
Replied 28 June 2016

AGREE WITH JADEJA

Soumya (Senior Accounts Executive) (235 Points)
Replied 29 June 2016

Dear All, I talked with Tally ERP Bangalore that she is saying limit is Rs.50,000/-. I got this problem from Tally while computing tax on total income. Please help.