Budget 2014- Home Loan Interest Exemption Limit on Self Occupied Property increased to Rs. 2 Lakh

Budget 2014-  Home Loan Interest Exemption Limit on  Self Occupied Property  increased to Rs. 2 Lakh

Deduction from income from house property

The existing provisions contained in section 24 of the Act provide that income chargeable under the head “Income from house property” shall be computed after making certain deductions. Clause (b) of the said section provides that where the property is acquired with borrowed capital, the amount of any interest payable on such capital shall be allowed as deduction in computing the income from house property. The second proviso to clause (b) of the said section, inter-alia, provides that in case of self-occupied property where the acquisition or construction of the property is completed within three years from the end of the financial year in which the capital is borrowed, the amount of deduction under that clause shall not exceed one lakh fifty thousand rupees.

There has been appreciation in the value of house property and accordingly cost of finance has also gone up. Therefore, it is proposed to amend the second proviso to clause (b) of said section 24, so as to increase the limit of deduction on account of interest in respect of property referred to in sub-section (2) of section 23 to two lakh rupees.

These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years in other words the same will apply in relation to Financial Year 2014-15 and subsequent Financial Years.

Related Provision in Finance Act, 2014

Amendment of section 24.

10. In section 24 of the Income-tax Act, in clause (b), in the second proviso, for the words “one lakh fifty thousand rupees”, the words “two lakh rupees” shall be substituted with effect from the 1st day of April, 2015.

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