Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely: —
1. Standard Deduction [Section 24(a)]
- Flat 30% of Net Annual Value (NAV)
- Granted automatically, regardless of actual expenses
- Covers repairs, maintenance, etc.
- Example:If NAV = ₹5,00,000 → Deduction = ₹1,50,000
2. Interest on Home Loan [Section 24(b)]
| SCENARIO | DEDUCTION LIMIT | CONDITIONS |
| Self-occupied Property | Max ₹2,00,000 per year | Must be for purchase/construction |
| Let-out/Deemed Let-out Property | No upper limit (full interest allowed) | Must be for purchase/construction/repairs |
| Pre-construction Interest | Deductible in 5 equal instalments from year of completion | Only for under-construction properties |
Key Points:
- Loan must be from recognized financial institution
- Interest certificaterequired from lender
- For joint loans, each co-ownercan claim ₹2L (self-occupied)
3. Municipal Taxes [Section 23(1)]
- Deductible from Gross Annual Value (GAV)if:
- Paid by the owner(not tenant)
- Paid during the financial year
Example:
- GAV = ₹6,00,000
- Municipal taxes paid = ₹40,000
- NAV = ₹6,00,000 – ₹40,000 = ₹5,60,000
4. Summary of Deductions
| DEDUCTION | SELF-OCCUPIED | LET-OUT/DEEMED LET-OUT |
| Standard (30% of NAV) | Not applicable (NAV=0) | Allowed |
| Interest on Home Loan | Max ₹2,00,000 | No limit |
| Municipal Taxes | Not applicable (NAV=0) | Deducted from GAV |
5. Practical Computation
Case 1: Self-Occupied Property
- Interest paid = ₹3,00,000
- Deduction allowed = ₹2,00,000
- Taxable income = –₹2,00,000(loss, can be set off)
Case 2: Let-out Property
- NAV = ₹8,00,000
- Standard deduction = ₹2,40,000 (30%)
- Interest paid = ₹4,50,000
- Taxable income = ₹8,00,000 – ₹2,40,000 – ₹4,50,000 = ₹1,10,000
6. Important Notes
- Loss from House Propertycan be set off against other income (max ₹2L/year)
- Unabsorbed interest(beyond ₹2L for SOP) can be carried forward for 8 years
- Joint ownerscan each claim deductions proportionately
For pre-construction interest, divide total interest by 5 and deduct yearly.
