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CS Executive · Tax Laws and Practice · Income under the Head House Property

Under section 22 of the Income-tax Act, 2025, which statement about deductions in computing Income from house property is correct?

Section 22 allows a deduction of 30% of the annual value plus interest payable on capital borrowed for acquiring, constructing, repairing, renewing or reconstructing the property. Both deductions apply together, subject to the stated interest limits.

  1. AA deduction of 30% of the annual value is allowed, in addition to interest on capital borrowed for acquiring or constructing the propertyCorrect
  2. BOnly the interest on borrowed capital is allowed; no percentage deduction exists
  3. CA deduction of 30% of the net rent after municipal taxes is the only allowed deduction
  4. DInterest paid outside India is always allowed even if no tax was deducted

Explanation

Section 22(1)(a) allows 30% of the annual value and 22(1)(b) allows interest payable on borrowed capital for acquisition, construction, repair, renewal or reconstruction. Section 22(6) disallows foreign interest only where tax is neither paid or deducted and there is no agent in India, so it is not always allowed.

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