Sections 24 and 25 Income Tax Act 1961: Deductions from Income from House Property
Section 24 of the Income Tax Act, 1961 allowed specified deductions while computing income under the head "Income from house property". Section 25 restricted deduction of certain interest payable outside India. For tax year 2026-27 and later, the corresponding rules are contained principally in Section 22 of the Income-tax Act, 2025.
- Standard deduction: 30% of annual value.
- Interest on borrowed capital: deductible subject to the applicable conditions and limits.
- Prior-period or pre-construction interest: generally spread over five equal instalments under the applicable provision.
- For specified self-occupied properties, the interest ceiling is generally Rs. 2,00,000 where statutory conditions are met, and Rs. 30,000 in other cases.
- Interest payable outside India may be disallowed where the applicable tax deduction or payment requirements are not satisfied and there is no qualifying agent in India.
Section 24 of Income Tax Act 1961
Section 24 deals with deductions from income chargeable under the head "Income from house property". The section operates after annual value is determined under Section 23. The principal deductions are the standard deduction and interest on borrowed capital.
Section 24(a): 30% standard deduction
A deduction equal to 30% of the annual value is allowed. It is a statutory deduction and is not based on the taxpayer proving actual repair or maintenance expenditure.
Section 24(b): interest on borrowed capital
Interest may be deducted where capital has been borrowed for acquisition, construction, repair, renewal or reconstruction of the property. The amount and conditions depend on the nature of the property and the purpose and timing of the borrowing.
| Situation under the 1961 Act | General Section 24 treatment |
|---|---|
| Let-out property | Interest payable on qualifying borrowed capital is deductible, subject to the Act and any other applicable restrictions. |
| Self-occupied property: acquisition or construction | Up to Rs. 2,00,000 where the statutory conditions are satisfied, including the prescribed completion period. |
| Other qualifying self-occupied cases | Deduction is generally limited to Rs. 30,000. |
| Interest for period before acquisition or construction | Eligible prior-period interest is allowed in five equal instalments beginning with the year of acquisition or construction, after adjustment for any amount already allowed elsewhere. |
Certificate for interest deduction
For the enhanced self-occupied property deduction, the assessee must furnish the prescribed certificate from the person to whom the interest is payable. The certificate should specify the interest payable on the borrowed capital and, where relevant, interest on a new loan taken to repay the original borrowing.
Section 25 of Income Tax Act 1961
Section 25 is a non-obstante provision: it applies notwithstanding Section 24. It prevents deduction of specified interest chargeable under the Act and payable outside India where tax has not been paid or deducted under the applicable tax-deduction provisions and there is no person in India who may be treated as an agent under the relevant provision.
In practical terms, a house-property interest expense does not become deductible merely because it otherwise falls within Section 24. Where the conditions of Section 25 are attracted, the deduction is denied.
Current law from 1 April 2026: Section 22 of Income-tax Act 2025
The Income-tax Act, 2025 reorganised the house-property provisions. The present deduction rule is Section 22. It expressly provides for:
- 30% of annual value determined under Section 21;
- interest payable on capital borrowed for acquisition, construction, repair, renewal or reconstruction;
- prior-period interest in five equal instalments;
- an aggregate ceiling of Rs. 2,00,000 for specified self-occupied properties where the statutory conditions are satisfied, and Rs. 30,000 in other specified cases; and
- disallowance of interest payable outside India where tax has not been paid or deducted under Chapter XIX-B and there is no agent in India as specified in Section 306.
| Legacy provision | Current corresponding provision | Subject |
|---|---|---|
| Section 24, Income Tax Act 1961 | Section 22, Income-tax Act 2025 | Deductions from income from house property |
| Section 25, Income Tax Act 1961 | Section 22(6), Income-tax Act 2025 | Restriction on deduction of certain interest payable outside India |
New tax regime and self-occupied property interest
Under the default new tax regime in Section 202 of the Income-tax Act, 2025, the deduction for interest under Section 22(1)(b) is not available in respect of properties covered by Section 21(6). The restriction concerns the specified self-occupied property category. Taxpayers should therefore check the applicable tax regime and property classification before claiming the deduction.
Simple computation example
Suppose the annual value of a let-out house property after the relevant annual-value computation is Rs. 6,00,000. The 30% standard deduction would be Rs. 1,80,000. If qualifying interest on borrowed capital is Rs. 1,50,000, the amount after these two deductions would be Rs. 2,70,000, subject to all other applicable provisions and facts.
Official resources
For the current statutory position, refer to the official Income Tax Department materials:
This article is a general statutory guide. The applicable deduction can depend on the tax year, tax regime, nature and use of the property, loan purpose, completion date, supporting certificate and tax-deduction compliance.