|
74. Deduction of interest on loan taken for house property
|
|
|
74. Deduction of interest on loan taken for house property.— (1) A person, being an individual or a Hindu undivided family, shall be allowed a deduction, in respect of any amount paid or payable by way of interest on loan taken for the purpose of acquisition, construction, repair or renovation of a house property in the financial year in which such property is acquired or constructed or any subsequent financial year, subject to the conditions specified in sub-section (2).
(2) The deduction referred to in sub-section (1) shall be allowed if—
(a) the house property is owned by the person and not let out during the financial year ;
(b) the acquisition or construction of the house property is completed within a period of three years from the end of the financial year in which the loan was taken ; and
(c) the person obtains a certificate from the financial institution to whom the interest is paid or payable on the loan.
(3) The interest referred to in sub-section (1) which pertains to the period prior to the financial year in which the house property has been acquired or constructed shall be allowed as deduction in five equal instalments beginning from such financial year.
(4) The interest referred to in sub-section (3) shall be reduced by any part thereof which has been allowed as deduction under any other provision of this Code.
(5) The amount of deduction under this section shall not exceed one lakh and fifty thousand rupees.
Clause 74 seeks to provide that a person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of an amount paid or payable by way of interest on loan taken for the purpose of acquisition, construction, repair or renovation of a house property in the financial year in which such property is acquired or constructed or any subsequent financial year, subject to certain conditions specified therein.
Sub-clause (2) of the said clause specifies the conditions by providing that the deduction shall be available if —
(a) the house property is owned by the person and not let out during the financial year ;
(b) the acquisition or construction of the house property is completed within three years from the end of the financial year in which the loan was taken ; and
(c) the person obtains a certificate from the financial institution to whom the interest is paid or payable on the loan taken.
Sub-clause (3) of the said clause provides that the interest, which pertains to the period prior to the financial year in which the house property has been acquired or constructed, shall be allowed as deduction in five equal instalments beginning from such financial year. For example, if the total amount of interest paid prior to the financial year in which the house property has been acquired or constructed is one lakh rupees, then, the person would be eligible for a deduction of twenty thousand rupees every year for five years starting from the year in which the house property is acquired or constructed.
Sub-clause (4) of the said clause provides that the interest for such prior period shall be reduced by any part thereof which has been already allowed as a deduction under any other provision of this Code.
Sub-clause (5) lays down the maximum limit of deduction that can be claimed under this clause. This limit has been specified as one lakh and fifty thousand rupees.
|
|
|
Case Look ups