Deduction’s u/s 22 – a) Standard Deduction b) Interest on Borrowed
by Under the Income tax Act, 2025, Section 22 provides deductions while computing income chargeable under the head “Income from House Property.” The section mainly allows two important deductions: 30% of the annual value as standard deduction and interest payable on borrowed capital used for acquiring, constructing, repairing, renewing or reconstructing the property. These deductions are allowed after determining the annual value under Section 21.
a) Standard Deduction [Section 22(1)(a)]
A standard deduction of 30% of the annual value is allowed while computing income from house property. The deduction is allowed irrespective of the actual amount spent by the owner on repairs, maintenance, insurance, electricity, security or other expenses relating to the property. Therefore, the taxpayer does not have to prove the actual expenditure incurred on maintenance.
Formula:
Standard Deduction = 30% × Annual Value
For example, if the annual value of a house property is ₹5,00,000:
Standard Deduction = ₹5,00,000 × 30% = ₹1,50,000
Thus, ₹1,50,000 will be allowed as deduction while computing income from house property.
b) Interest on Borrowed Capital [Section 22(1)(b)]
Where a house property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the interest payable on such borrowed capital is allowed as a deduction, subject to the specific limits and conditions applicable to the property. For a let out property, the interest deduction is generally allowed without a monetary ceiling under Section 22(1)(b).
For certain self occupied properties, the aggregate deduction for interest is restricted to ₹2,00,000, where the prescribed conditions are satisfied, including completion of acquisition or construction within the specified period and furnishing the required certificate. In other cases, the applicable limit is ₹30,000.
Interest relating to the period before acquisition or construction of the property is allowed in five equal instalments, beginning from the tax year in which the property is acquired or construction is completed.
Computation
Annual Value
Less: 30% Standard Deduction
Less: Interest on Borrowed Capital
= Income from House Property