Section 24 Income Tax Act: Its Exemptions and Deduction Limits

2025-05-03

908 Views

4 minutes read

Begin securing your future

Full Name* Please enter correct name Please enter the Full name

Mobile Number* Please enter valid mobile number Please enter Mobile Number

Email* Please enter valid email Please enter Email

I agree that even if my contact number is registered with NDNC / NCPR, I would still want the Company to contact me on the given number and email id for the clarifications/product information sought by me and agree that I have read and understood the Privacy Policy and agree to abide by the same.

...Read more Consent is required

Locate branch

Resume journey

Pay Premium

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid

Mobile Number is required Mobile Number should be Valid

Email is required Email should be Valid

DOB is required DOB should be Valid

Annual Income*

< 3 3-5 5-7 7-10 > 10

Annual Income is required

Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

Section 24 in Income Tax Act? A Must-Have Guide for Every Employee

0 1

Section 24 of the Income Tax Act- Simplified

0 2

The Essentials of House Property Tax

0 3

Deductions Under Section 24

0 4

Exemptions Under Section 24

Under the income tax returns,properties that are not used for business or professional purposes are treated as 'house property' and taxed accordingly. For tax purposes, the owner is the legal owner of the property and can exercise ownership rights on his/her own behalf. Section 24 of the Income Tax Act 1961 considers interest paid on a home loan, i.e., "deductions from income under the head House Property". It allows you to exclude the interest you have paid on your home loan from your taxable income.

There is a ₹1,50,000 cap on tax deductions under sec 24. You can still claim deduction on taxes even if you don't live in the house. Monthly rental income from a house may be deducted from taxes as the rent you pay on a rental property is taxed.

Section 24 of the Income Tax Act- Simplified

Under Section 24 of the Income Tax Act, homeowners who reside in the home property and are the owner or a member of their family are eligible to claim a deduction up to ₹2 lakh. The deduction is possible if the property is acquired or constructed with a home loan and completed within five years from the end of the financial year in which the loan was taken. You can still claim interest deduction under Section 24, even if the property is not self-occupied. If the property is rented out, rental income is taxable under the head 'Income from House Property'. However, deductions such as municipal taxes and a 30% standard deduction are allowed from this rental income.

The Essentials of House Property Tax

House property typically includes residential homes or buildings not used for business purposes. However, shops or offices are classified as ‘house property’ only if they are not used for business or profession by the owner. According to the Income Tax Act, 1961, there is no separate classification between residential and commercial property under the head ‘Income from House Property’. All such properties are taxed similarly unless used for business purposes.

When a property is used for business or profession, it is taxed as "income from business and profession." Costs for upkeep and repairs are deductible as company expenses. House property taxes are levied on various types of properties, such as:

Self-occupied Housing Property

The only people who live in a self-occupied home are the owner's family. This includes properties used by the taxpayer or their immediate family, such as spouse, children, or parents, without any rental income. For income tax purposes, an unoccupied residential property is regarded as self-occupied.

Before the FY 2019-20, only the first self-occupied residential property owned by the taxpayer was considered self-occupied while all additional properties were assumed to be rented out. Whether a property qualifies for a self-occupied deduction is up to the taxpayer. Treating two residences as self-occupied has proved advantageous for 2019-20 and beyond. Currently, a taxpayer can treat up to two properties as self-occupied, and any additional properties will be deemed let-out, with notional rental revenue considered for tax computation under the head ‘Income from House Property’.
Rented Out Housing Property

A house rented out for all or part of the year is considered a let-out house property for income tax purposes.
Property Passed Down Through the Generations (Inherited property)

Depending on your preferences, you can utilise an inherited property—one that was given to you by your parents, grandparents, or other family members—as your primary home or rent it out.

Deductions Under Section 24

The Indian Income Tax Act of 1961 allows for a number of tax deductions under section 24.

Municipal Tax Deductions: Municipal tax is an annual payment made to the local government. Subtract the annual gross value from the total taxes to determine a home's net worth. The deduction will be granted if the homeowner pays and bears the municipal tax for the entire fiscal year.
Standard Deductions: This section sets the standard deduction for income tax purposes at 30% of Net Annual Value. The self-occupied residence is not subject to this deduction, though.
Loan Interest Deductions: The interest on home loan taken for buying, fixing, constructing, rebuilding or renewing a property is deductible from taxes under Section 24.

Exemptions Under Section 24

You can be eligible for a tax deduction on the entire interest you pay, up to the maximum permitted amount if you don't live in the house. If you work or operate a business in a different town and live in a different property or rent a property in the city where you work, you may claim a deduction of up to ₹2 lakh on interest paid in such cases, even if the property is not self-occupied due to employment or business relocation.

You have five years from the end of the financial year in which the loan was borrowed to either buy your property or complete construction in order to deduct the entire interest amount. If the construction or acquisition is not completed within five years from the end of the financial year in which the loan was borrowed, the deduction limit is reduced to ₹30,000. It is necessary to obtain an interest certificate if you take out a loan.

Purchasing a house is difficult, and making mortgage payments over time is even more challenging. Section 24 of the Income Tax Act provides valuable tax relief on home loan interest, particularly benefiting first-time buyers and those managing significant mortgage obligations. It is easier to purchase the house of your dreams if you take advantage of Section 24 deductions.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Consequences of Tax Evasion by Insurance Companies

Tax-Saving Checklist to Follow This Financial Year

Tax Savings - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.