section-24-of-income-tax-act

What is Section 24 in the Income Tax Act?

Save tax under Section 24 of the Income Tax Act. Learn about the ₹2 Lakh home loan interest cap, 30% rental deduction, and New Tax Regime rules.

Written by : Knowledge Centre Team

2026-07-08

924 Views

4 minutes read

Exit Pop Up

Introducing BSE 500 Enhanced Value 50 Fund with Promise4Wealth

50 High-Potential Companies, One Smart Decision

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
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.

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 legal owner exercises ownership rights. Section 24(b) allows taxpayers to deduct home loan interest from their taxable income.

For a self-occupied property, this interest deduction is capped at ₹2,00,000 per year, though it is only available if you choose the Old Tax Regime. You can still claim this deduction if the house is vacant due to employment outside your home city. If the property is let out (rented), the rental income is taxable, and you can claim the entire interest paid without an upper limit, alongside a 30% standard deduction on the net rental value. However, note that under the New Tax Regime, any net tax loss arising from a rented property cannot be set off against your salary income.

Key Takeaways

  • Properties not used for personal business fall under 'House Property' rules, allowing taxpayers to declare up to two homes as self-occupied tax-free before facing taxes on fictional market rent

  • The maximum ₹2,00,000 interest deduction for a self-occupied home only works under the Old Tax Regime and is completely unavailable under the New Tax Regime

  • Landlords can deduct the entire interest paid on a home loan for a rented property without any upper limit under both tax regimes

  • Construction must finish within 5 years from the loan's financial year-end to get the ₹2,00,000 cap, or it drops down to ₹30,000

  • Landlords automatically get a flat 30% standard deduction for upkeep based on the property's value, regardless of actual repair costs

Section 24 of the Income Tax Act- Simplified

Under the rules governing Income from House Property, homeowners who occupy their residence (or have family members residing there) are eligible to claim a tax deduction on their home loan interest. Under the Old Tax Regime, this interest deduction is capped at ₹2,00,000 per year. To qualify for this full cap, the property's acquisition or construction must be completed within five years from the end of the financial year in which the loan was taken; otherwise, the deduction shrinks to ₹30,000. 

Crucially, the ₹2,00,000 deduction on self-occupied properties is completely unavailable under the New Tax Regime, which serves as the default tax system.

However, you can still claim tax relief if the property is rented out (let-out). Under both tax regimes, rental income is taxable, but homeowners can deduct the entire interest paid on the home loan without any upper limit. According to the Income Tax Department guidelines, you are also permitted to subtract municipal taxes paid during the year and claim a flat 30% standard deduction from the remaining net annual value to cover general house maintenance. Note that if you are filing under the New Tax Regime, any net loss resulting from your rented property cannot be used to offset your salary income.

Save Taxes While Building Long-Term Wealth

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy No.

Address of the Policyholder as per records

Unclaimed Amount

Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

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

The Essentials of House Property Tax

According to the Income Tax Act, 2025, there is no separate legal classification between residential and commercial real estate. However, shops or offices are classified as ‘house property’ only if they are rented out to a tenant rather than utilised by the owner for their own business or profession.  All such properties are taxed similarly unless used by the owner for business purposes.

When a property is used for business or a profession by the owner, it is taxed as "income from business and profession." In those cases, costs for upkeep and repairs are deductible as operational business expenses rather than house property deductions. House property taxes are levied on various types of properties, such as:

  1. 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 tax purposes, an unoccupied residential property is also regarded as self-occupied if it remains vacant due to the owner's employment in a different city.

    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’.

  2. 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. Under both the Old and New tax regimes, this rental income is taxable. However, landlords are allowed to deduct paid municipal taxes, a standard 30% statutory deduction for general maintenance, and the entire interest paid on their housing loan without any upper limit.

  3. Property Passed Down Through the Generations (Inherited property): An inherited property, passed down to you by parents or family members, carries the same tax rules as a self-purchased home once the title is legally transferred. Depending on your preferences, you can utilise an inherited property as your primary home or rent it out.
Do you know

Did You Know?

You can claim a flat 30% tax deduction on your rental income for home repairs, even if you spent zero rupees on actual maintenance. 
 

Source: Income Tax Department

Cut Tax Stress 46,800

Deductions Under Section 24

The Indian Income-tax Act, 2025, allows taxpayers to claim specific tax deductions under Section 24 of the Income Tax Act to lower their overall taxable house property income. These deductions are categorised into three distinct parts:

  • Municipal Tax Deductions: Municipal tax is an annual payment made to the local government. To calculate a property’s Net Annual Value (NAV), you must subtract the paid municipal taxes from its Gross Annual Value (GAV). This deduction is strictly permitted only if the homeowner actually bears the expense and clears the payment within that specific financial year  

  • Standard Deductions: As per Section 24(a), a flat statutory deduction of 30% of the Net Annual Value (NAV) is granted to taxpayers to cover general repairs and property upkeep. The self-occupied residence is not subject to this deduction, though

  • Loan Interest Deductions: The interest on a home loan taken for buying, fixing, constructing, rebuilding or renewing a property is deductible from taxes under Section 24(b). For a self-occupied property, this deduction is capped at ₹2,00,000 per year and is strictly limited to the Old Tax Regime; it cannot be claimed under the default New Tax Regime

Exemptions Under Section 24

The Indian Income-tax Act, 2025, outlines specific exemptions and parameters for claiming tax relief on home loan interest, ensuring that homeowners can optimise their savings based on their living situations and construction timelines.

  1. Deductions During Job Relocation: . 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 tax 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. However, if you choose the default New Tax Regime, this concession is entirely unavailable for vacant or self-occupied homes.

  2. The Strict 5-Year Construction Timeline: To qualify for the maximum interest deduction cap on a self-occupied home, the property's acquisition or construction must be completed within five years from the end of the financial year in which the home loan was originally borrowed.  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 from ₹2,00,000 to ₹30,000. It is necessary to obtain an interest certificate if you take out a loan.

  3. Mandatory Documentation and Financial Relief: Purchasing a house is difficult, and making mortgage payments over time is even more challenging. While home loan interest deductions under Section 24(b) historically provided vital relief for first-time buyers, this benefit is completely unavailable under the default New Tax Regime. To claim the maximum ₹2,00,000 annual interest deduction on a self-occupied home, buyers must actively opt for the Old Tax Regime.

Summing Up

Managing house property taxation requires a clear understanding of how your real estate assets are classified and how your choice of filing system impacts your deductions. While the Old Tax Regime remains highly advantageous for individuals managing heavy mortgage obligations due to its ₹2,00,000 self-occupied interest deduction, the default New Regime shifts the focus toward lower upfront tax rates while eliminating residential tax breaks entirely. Landlords, however, enjoy protected status under both paths, retaining the right to claim a flat 30% maintenance deduction alongside completely uncapped home loan interest write-offs. To shield yourself from penalties, always track the strict five-year construction timeline and secure an official Home Loan Interest Certificate from your bank before filing to ensure your savings stay completely audit-proof.

Glossary

  1. Gross Annual Value (GAV): The total estimated market rent that a house property can reasonably earn over a full financial year
  2. Net Annual Value (NAV): The remaining rental value of a property after subtracting paid local municipal taxes from its GAV
  3. Deemed Let-Out: An extra vacant home treated as rented by tax rules, forcing you to pay tax on its estimated market rental value
  4. Statutory Deduction: A fixed, legally mandated tax discount given by the government regardless of your actual upkeep expenses.
  5. Interest Certificate: A bank statement showing the exact principal and interest paid on your home loan during the financial year
Glossary book
Uncertain About Insurance?

FAQs

Section 24 outlines the permissible deductions from income earned under the head "Income from House Property." It primarily serves as the legal provision that allows homeowners to subtract their home loan interest payments and a standard maintenance allowance from their taxable income.

The two deductions are the Standard Deduction (Section 24(a)), which grants a flat 30% discount on rental income for property upkeep, and the Interest Deduction (Section 24(b)), which allows you to deduct the interest paid on a housing loan.

For a self-occupied property, the maximum annual deduction is capped at ₹2,00,000 under the Old Tax Regime. For a rented property, there is no maximum upper limit, allowing you to deduct the entire interest paid against your rental income.

Yes. Under both the Old and New tax regimes, you can deduct the entire interest paid on the home loan, along with a flat 30% standard deduction from the net rental income before tax is calculated.

It is completely unavailable for self-occupied or vacant properties under section 24 in the New Tax Regime. However, if your property is actively rented out (let-out), you can still claim the Section 24 deductions under the New Regime to reduce your taxable rental income.

To claim the full ₹2,00,000 interest deduction on a self-occupied home, construction or acquisition must be completed within five years from the end of the financial year the loan was taken. If it takes longer, your maximum deduction limit permanently shrinks to ₹30,000.

Yes. If both co-owners are also co-borrowers on the home loan, they can each claim up to ₹2,00,000 (totalling ₹4,00,000) for a self-occupied property under the Old Tax Regime, provided they split the claim according to their share in the property.

Yes. The tax head "Income from House Property" covers both residential and commercial real estate. If a shop or office space is rented out to a tenant, the interest paid on its purchase loan is fully deductible under Section 24(b).

You must obtain an official Home Loan Interest Certificate from your lending bank, which clearly breaks down your total annual payments into principal and interest components. You must also maintain the property’s completion or possession certificate to prove ownership timelines.

Section 24(b) allows you to deduct the interest component of your home loan up to ₹2,00,000 under the Old Regime. Section 80C allows you to deduct the principal repayment component of the loan up to a separate cap of ₹1,50,000 under the Old Regime. Both are blocked for self-occupied homes under the New Regime.

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.

Recent Blogs

Cancel Gst Registration Thum Desktop
How to Cancel GST Registration Online in 2026?
09 July '26
1116 Views
8 minute read
Learn how to cancel GST registration online, required documents and important steps involved in the process.
Read More
Tax Saving
Importance Of Taxes Thum Desktop
Taxation of Interest on EPF Contribution: All You Need to Know
08 July '26
1820 Views
7 minute read
Learn how to calculate taxable interest on provident fund (EPF) contributions to maximize your savings. Understand the EPF interest rate and its tax benefits.
Read More
Tax Saving
How To Budget For A Dream Vacation Thum Desktop
LTA Tax Benefits Explained: Claim Leave Travel Allowance Smartly
08 July '26
853 Views
6 minute read
Discover how Leave Travel Allowance (LTA) helps you save tax on domestic travel. Learn eligibility, exemption limits, and how to file claims under Section 10(5).
Read More
Tax Saving
Tax Implications Of Surrendering Insurance Policy Thum Desktop
New vs Old Tax Regime FY 2025-26: Salary Break-Even Guide
08 July '26
1343 Views
11 minute read
Compare new vs old tax regime for FY 2025-26. Understand salary break-even points, deductions, and benefits to choose the right regime for your income.
Read More
Tax Saving
What Is Cgst Thum Desktop
What is CGST? Meaning, Rates & Features Explained
08 July '26
1265 Views
7 minute read
Learn what CGST means, its full form, key features, tax rates, and how Central GST is applied under India’s GST framework.
Read More
Tax Saving
Old Tax Regime Thum Desktop
Old vs New Tax Regime: Things You Need to Know
07 July '26
6795 Views
10 minute read
Explore the new tax regime vs the old one and choose what suits you best. Learn key differences and gain valuable insights with Canara HSBC Life Insurance.
Read More
Tax Saving
GST Portal Login Guide
GST Portal Login Guide: Step-by-Step Instructions for Registration
07 July '26
1199 Views
5 minute read
Need help with GST login? Follow this step-by-step guide to access the GST portal easily and manage your tax filings without any confusion.
Read More
Tax Saving
Ways To Save Capital Gain Tax On Sale Property Thum Desktop
3 Ways To Save Capital Gain Tax on The Sale of a Property
07 July '26
2545 Views
10 minute read
Want to know how you can save capital gain tax on property sales? Understand best and safe ways to save capital gain tax on the sale of a property.
Read More
Tax Saving
How To Save Tax For Salary Above 10lakhs Thum Desktop
Do You Pay Income Tax on a ₹5 Lakh Salary? FY 2026 - 27 Tax Guide
18 June '26
1674 Views
6 minute read
Wondering if you need to pay income tax on a ₹5 lakh salary? Check your tax liability under the new and old tax regimes, understand rebate eligibility, and calculate your tax for FY 2026–27.
Read More
Tax Saving

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.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness