Deduction allowed under Income from House Property
Any income received in related to house property is taxable. According to Income Tax Act, 1961 a person receiving income from house property can deduct certain amount under section 24 as standard deduction (other than municipal tax paid in the case of let out property) from the income from house property.
Standard deduction prescribed under section 24 is as follows
In the case of let out property (ie. which is given on rent)
- 30 % of annual value of the house, and
- Interest on loan, taken for purchase, construction or repair of the house
- Interest on loan paid prior to the previous year in which the house is completed is allowed in five equal installments
In the case of self occupied house (ie which is used by the person for his residence or due to his profession, business, employment carried at any other place, he was not able to reside in his house )
- 30 % of annual value of the house, and
- Interest on loan to a maximum of Rs 30,000(for loan taken before 31/3/1999) or Rs 1, 50,000 (for loan taken after 31/3/1999)
NOTE-municipal taxes can be deducted from Gross annual value to arrive Annual Value in the case of let out house only.