HAS THERE BEEN AN INCREASE IN THE LIMIT OF DEDUCTION ALLOWABLE FOR INTEREST PAYABLE ON BORROWED CAPITAL IN RESPECT OF SELF-OCCUPIED PROPERTY?
Yes. While computing the income from house property, no deduction on account of repairs, insurance premium on No deduction on account of repairs, insurance premium on property, ground rent, land revenue or vacancy allowance in respect of the self-occupied houses is allowable. However, even in this case of self-occupied property, interest on borrowed Capital is deductible.
Upto A.Y. 1998-99 a deduction upto Rs. 15,000 in respect of interest payments, on borrowed funds, for the self occupied houses was allowable. This limit of Rs* 15,000 was, w.e.f. 1.4.99 i.e. for A.Y. 1999-2000, and subsequent years, been enhanced to Rs.30,000.
The deduction for interest on borrowed capital in A.Y. 2000-2001, was limited to Rs.75,000, and for A.Y.2001-2002 this limit was increased to Rs.1,50,000.
With effect from 1 April, 2002, i.e. in relation to the assessment year 2002-2003 and subsequent years, the limit on deduction of such interest payable on housing loans for self-occupied houses has been increased from the existing Rs. 1,00,000 to Rs. 1,50,000.
This deduction may create a loss in house property which is to be set-off from other incomes under other heads. This is a big relief to the tax payers planning to own their houses on the basis of borrowings.

^Top

IS THERE A CUT OFF DATE AFTER WHICH THE PROPERTY IS TO BE ACQUIRED OR CONSTRUCTED?

Yes. For availing the higher limit of Rs.1,50,000 the property has to be acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed before the 1st day of April, 2003.

^Top

HAS THERE BEEN A CHANGE IN THE ALLOWABILITY OF INTEREST PAYABLE ON BORROWED CAPITAL IN RESPECT TO HOUSE PROPERTY REMAINING VACANT DUE TO EMPLOYMENT ETC ?
Yes, U/s 23(3), if the property cannot be occupied by the owner by reason of the fact that owing to his employment, business or profession, he has to reside at that other place in a building not belonging to him, the annual value of such property is also taken at provided that such house is not actually let and no other benefit there from is derived by the owner.
Deduction on account of interest payable on borrowed capital was not available to assessees who were unable to occupy the property by reason of their employment, etc. at a place other than where the property is situated. Effective, retrospectively, from 1st April. 1995 now the deduction on account of interest payable on borrowed capital was extended to such class of persons also.


^Top

IS PENAL INTEREST ON LOAN ALLOWABLE ?
As per CBDT Circular No. 363, dt. 24-6-83.

^Top

IS INTEREST PAYABLE ON LOAN TAKEN TO REPAY THE ORIGINAL LOAN , ALLOWABLE ?
Yes.

^Top

IS INTEREST EXPENSES FOR ARRANGING THE LOAN, i.e. PROCESSING CHARGES ETC. ALLOWABLE
No. Only interest on due basis on loan for acquisition is allowable.

^Top

IF THE ASSESSES IS NOT THE OWNER OF THE PROPERTY IN THAT YEAR BUT HAS RECEIVED AN AMOUNT BY WAY OF ARREARS OF RENT WHICH WERE NOT CHARGED TO INCOME TAX FOR ANY PREVIOUS YEAR, WOULD THIS AMOUNT BE CHARGEABLE TO TAX?
Yes. Now, where the assessee is the owner any property which has been let to a tenant and the assessee has received from such property any amount by way of arrears of rent, the amount so received after deducting a sum equal to 30% of such amount for repairs and collection of rent etc. shall be deemed to be income chargeable under the head "Income from House Property " and charged to Income-tax as income of the previous year in which the rent is received irrespective of whether the assessee is the owner of that property in that year or not.

^Top

CARRY FORWARD AND SET-OFF OF LOSS FROM HOUSE PROPERTY
As per section 7IB, w.e.f. 1-4-1999, when the assessee incurs any loss under the head income from house property and such loss is not fully adjusted under other heads of income in the same assessment year, then the balance loss shall be allowed to be carried forward upto a maximum of eight assessment years and set off against income from house property.

^Top

CAN ADJUSTMENT OF LOSS FROM HOUSE PROPERTY BE MADE AGAINST SALARY INCOME FOR PURPOSES OF T.D.S. DEDUCTION?
Yes. Now w.e.f. 1.4.99 i.e. for A.Y. 1999-2000 and subsequent years, loss from house properly shall be allowed to be adjusted against salary income at the source itself. Therefore, refund claims of T.D.S. deducted in excess, on this count, will no more be necessary.

^Top