Guide on section 22 of Income Tax Act - Deductions from income from house property

Last Updated: 01-04-2026

22.1 Deductions from income from house property

Section 22(1)

“Income from house property” shall be computed after making following deductions

Cl	Deductions	Conditions
(a)	30% of the annual value as determined u/s 21	NA
(b)	Interest on capital borrowed for	Property been acquired, constructed, repaired, renewed or reconstructed with such borrowed capital
(c)	Interest for the said prior period / 5 equal instalments	Where capital is borrowed prior to the tax year in which the property has been acquired or constructed

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30% of the annual value is a flat deduction and is allowed irrespective of the actual expenditure incurred.

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Interest relating to the year of completion of construction/ acquisition of property

can be fully claimed in that year irrespective of the date of completion/ acquisition.

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Unpaid purchase price would be considered as capital borrowed

Where a buyer enters into an arrangement with a seller to pay the sale price in installments along with interest due thereon, the seller becomes the lender in relation to the unpaid purchase price and the buyer becomes the borrower. In such a case, unpaid purchase price can be treated as capital borrowed for acquiring property and interest paid thereon can be allowed as deduction.

22.1.1 Interest on pre-construction period = Interest for prior period – deduction already allowed

Section 22(3)

The deduction u/s 22(1)(c) shall be computed after reducing the interest by any amount already allowed as a deduction under any other provisions of this Act.

21.1.2 Maximum Deduction of interest for self-occupied or unoccupied property where annual value is nil

Section 22(2)

In case of property or properties referred to in section 21(6), [Self occupied Property]

Aggregate amount of deduction u/ss (1)(b) and (c)] shall not exceed

Deduction

Conditions

(a)

₹ 2,00,000

(i) property has been acquired or constructed with borrowed capital and

such acquisition or construction is completed within 5 years from the end of tax year in which capital was borrowed;

(ii) assessee furnishes a interest certificate from lender;

(b)

₹30,000

In any other case [Repair, reconstruction etc]

22.1.2.1 Maximum amount of deduction of interest u/ss (2) = Rs.2,00,000

Section 22(5)

The aggregate of the amounts of deduction u/ss (2) in respect of [self-occupied] properties referred to in section 21(6)

shall not exceed ₹ 200000.

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The ceiling limit would not apply to let-out/deemed let-out property:

The ceiling limit prescribed for self-occupied property in respect of interest on loan borrowed does not apply to a let out/ deemed let-out property.

22.1.2.2 Contents of Certificate

Section 22(4)

The certificate referred to in sub-section (2) shall specify–

(a) amount of interest payable on capital borrowed; and

(b) interest payable on any new loan, where subsequent to the capital borrowed, the assessee has taken any such loan for repayment of whole or any part of such capital.

22.1.3 TDS to be deducted on interest payable outside India

Section 22(6)

Any interest chargeable under this Act which is payable outside India shall not be allowed as a deduction under this section, if—

(a) tax has not been paid or deducted on such interest under Chapter XIX-B; and

(b) in respect of such interest, there is no agent in India as per section 306.

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Guide on section 22 of Income Tax Act - Deductions from income from house property