Deductions u/s 24 from Net Annual Value
by After determining the Net Annual Value (NAV) of a house property, certain deductions are allowed under Section 24 for computing taxable income from house property. The section mainly provides deductions for standard deduction and interest on borrowed capital. These deductions are available subject to prescribed conditions. The deductions help determine the actual taxable income or loss arising from a house property.
1. Standard Deduction under Section 24(a)
Under Section 24(a), a standard deduction of 30% of the Net Annual Value is allowed while computing income from a let out house property. This deduction is available irrespective of the actual expenditure incurred by the owner on repairs, maintenance, collection of rent or other related expenses. Therefore, the taxpayer does not need to provide separate evidence of actual repair expenses for claiming this deduction. For example, if the Net Annual Value is ₹3,00,000, the standard deduction will be ₹90,000. The deduction is generally available for let out and deemed let out properties. For a self occupied property having Nil annual value, this deduction does not apply.
2. Interest on Borrowed Capital under Section 24(b)
Under Section 24(b), deduction is allowed for interest payable on borrowed capital used for acquisition, construction, repair, renewal or reconstruction of a house property. The amount of deduction depends upon the nature and use of the property and the applicable conditions. For a qualifying self occupied property, the deduction may be available up to the prescribed limit, subject to conditions. For a let out property, interest is generally deductible while computing income from the property, subject to the applicable provisions. Interest relating to the period before completion of construction may also receive treatment under prescribed rules. The deduction helps reduce taxable income from house property.