What is section 24 of income tax act?

The Government of India wants its citizens to purchase residential property. Therefore the Government is introducing different housing schemes for LIG, HIG, MIG Group. Not only this the government also provides tax exemption to its citizens for purchasing a residential property. For this, they have come up with guidelines that can help the Indian citizens save on taxes. This is what is section 24 of income tax in simple words. To make things understand better I will discuss Section 24 in brief below.

What is section 24 of income tax act?

Section 24 is titled ‘Deductions from income from house property. So what are the ways to save on taxes under section 24?

Under Section, you can claim for tax exemption if you have applied for a home loan. Another Section 80C also allows you to claim benefits on the repayment of home loans.

As per Section 24 income from house property is applicable when:

• If you have rented out your house it should be considered as a part of your income.

• If you have purchased more than 1 house, the net value of the houses shall be considered as your income. This excludes the house you are living in.

• Income from house property will be Nil if you own one house.

Deductions under Section 24:

• 30% of the net annual value does not fall under the tax limit. This is not applicable if you are occupying a house where you are living.

• For a self-occupied property, you can claim a tax exemption of up to 2 lakh.

• You can take loans for construction and claim tax exemptions. You can claim deductions on the interest paid for construction purposes in 5 equal instalments.

• You cannot claim tax exemptions for reconstructions or renovations.

These were the terms and clauses of section 24 of income tax act.

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