Under the existing
provisions of section 24 of the Income-tax Act, income chargeable under the
head ‘Income from House Property’ is computed after making the deductions
specified therein. The deductions specified under the aforesaid section are as
under:-
A sum equal to thirty per cent of the annual
value;
Where the property has been acquired,
constructed, repaired, renewed or reconstructed with borrowed capital, the
amount of any interest payable on such capital.
It has also been provided that where the
property consists of a house or part of a house which is in the occupation of
the owner for the purposes of his own residence or cannot actually be occupied
by the owner by reason of the fact that owing to his employment, business or
profession carried on at any other place, he has to reside at that other place
in a building not belonging to him, then the amount of deduction as mentioned
above shall not exceed one lakh fifty thousand rupees subject to the conditions
provided in the said section.
Keeping in view the need for affordable housing,
an additional benefit for first-home buyers is proposed to be provided by
inserting a new section 80EE in the Income-tax Act relating to deduction in
respect of interest on loan taken for residential house property.
The proposed new section 80EE seeks to provide
that 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 house property.
It is further provided that the deduction under
the proposed section shall not exceed one lakh rupees and shall be allowed in
computing the total income of the individual for the assessment year beginning
on 1st April, 2014 and in a case where the interest payable for the previous
year relevant to the said assessment year is less than one lakh rupees, the
balance amount shall be allowed in the assessment year beginning on 1st April,
2015.
It is also provided that the deduction shall be
subject to the following conditions:- (i) the loan is sanctioned by the
financial institution during the period beginning on 1st April, 2013 and ending
on 31st March, 2014; (ii) the amount of loan sanctioned for acquisition of the
residential house property does not exceed twenty-five lakh rupees; (iii) the
value of the residential house property does not exceed forty lakh rupees; (iv)
the assessee does not own any residential house property on the date of
sanction of the loan.
It is also provided that where a deduction under
this section is allowed for any assessment year, in respect of interest
referred to in sub-section (1), deduction shall not be allowed in respect of
such interest under any other provisions of the Income-tax Act for the same or
any other assessment year.
It is also proposed to define the term
“financial institution”.
