Apart from 30% Standard Deduction,
Assessee can also claim Deduction for Interest on Housing loan
if he has interest payable on housing loan
Such loan may be taken for construction of house or for its repairs or renovation
NAV | XX |
Less | |
Deductions from House Property | |
Standard Deduction 30% | XX |
Interest on Housing Loan * |
XX |
income from House Property | XX |
*Limit of Deduction
If house is given on rent ,then full allowed as deduction without maximum limit.
(If house self occupied,then Max Deduction of 30000/200000 which we will study later.)
Note:-
Interest on loan is also called Interest on Borrowed Capital
Q1
NAV of Rented House= | 200,000 |
Loan taken at the Rate of 8 % p.a | 1,000,000 |
Calculate income from house property
--answer--
NAV | 200000 |
LESS | |
Standard Deduction 30% | -60000 |
Interest on Loan | -80000 |
(1000000*8%) | |
Income from House Property | 60000 |
Q2
Municipal valuation | 300000 |
Fair Rent | 400000 |
Standard Rent | 360000 |
Actual Rent | 480000 |
(40000*12) | |
Unrealized Rent | 40000 |
Housing loan taken @ 8% p.a | 1000000 |
Municipal taxes due | 10000 |
(Paid Rs 8000) | |
Ground Rent | 7000 |
Insurance premium | 3000 |
Repair done | 20000 |
Calculate income from the rented house property |
--answer--
A | Higher of Municipal Value or Fair Rent | 400000 |
B | Standard Rent | 360000 |
C | Expected Rent (Lower of A or B) | 360000 |
D | Actual Rent | 480000 |
E | GAV | 480000 |
(Higher of Expected or Actual Rent) | ||
Less | ||
F | Municipal Taxes Paid | -8000 |
G | Unearned Rent(40000*1) | -40000 |
H | NAV | 432000 |
Less | ||
i | Standard Deduction | -129600 |
(30%*432000) | ||
j | Interest on Housing Loan | -80000 |
k | Income from House Property | 222400 |
--endanswer--
Property Under Construction
- Interest is allowed only from the year in which construction is completed .
- If loan taken but construction not completed than interest on the same will accumulate and allowed from the year in which construction completed in five equal Annual installments .
Q3
NAV = | 2000000 |
House was purchased for construction by taking loan on 1 august 2011 and | |
Construction completed on 30 June 2014 | |
Interest paid in different financial year was | |
2011-12 | 80000 |
2012-13 | 70000 |
2013-14 | 30000 |
2014-15 | 20000 |
Total interest Paid | 200000 |
What is amount allowed as deduction in each year
--answer--
No Deduction allowed in 2011-12,2012-13 and 2013-14 as construction of property not completed.
Deduction will start from 2014-15 onwards
Amt of Deduction wil be
Interest paid in 2014-15=20000
+
1/5 of Interest paid in 2011-12,2012-13 and 2013-14
=(80000+70000+30000)*1/5=180000*1/5=36000
Hence Total Deduction in 2014-15=20000+36000=56000
NAV will be Computed as follows
NAV | 2000000 |
Less | |
Standard Deduction 30% | -600000 |
Interest on Housing Loan | |
Current Year Interest | -20000 |
Previous Years Interest | -36000 |
income from House Property | 1344000 |
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