What Does Section 24 Of Income Tax Act Provide For House Property?
Section 24 of the Income-tax Act of 1961 allows taxpayers to claim tax deductions against home loan interest and income from a rental property in a financial year. Learn more.
Section 24 of the Income-tax Act of 1961 allows taxpayers to claim tax deductions against home loan interest and income from a rental property in a financial year. Learn more.
NPS Deductions
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Section 24 of the Income-tax Act of 1961 allows taxpayers to claim tax deductions against home loan interest for self-occupied homes and income from a let-out property in a financial year.
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Here are some deductions allowed under Section 24 of the Income-tax Act, 1961.
Under the old tax regime, homeowners could claim a deduction of up to Rs 2 lakh in a financial year on home loan interest, provided they live in the same house. If the property is rented out, deductions are allowed up to Rs 30,000 under certain conditions, such as an ongoing loan for house purchase, construction and municipality taxes. The new tax regime does not allow tax deductions on home loan interests or rental income.
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Taxes paid to the local municipal corporation are called municipal taxes. It is determined yearly based on the property’s net worth minus the municipal taxes. Property owners can claim deductions for municipal taxes paid during a fiscal year.
The standard deduction is 30 per cent of the property’s previously determined net annual value. Regardless of how much you spend on the property, such as insurance, maintenance, energy, water supply, etc., you can claim a 30 per cent deduction. In a self-occupied house, the standard deduction is nil because the annual value is zero.
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Individuals owning residential properties that are self-occupied or let out can claim deductions under Section 24 of the Income Tax Act, 1961. Rental properties have a flat 30 per cent deduction on their gross annual value, regardless of actual expenses. Also, for self-occupied houses, deductions up to Rs 2 lakh in a financial year are allowed on home loan interests.
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Income sources dealt with under Section 56 of the Income Tax Act include dividends, one-time payments, advance payments, severance packages, and revenue from renting machinery.
The income tax (I-T) department has put in place certain safeguards, including monitoring of high-value transactions, to combat the menace of tax evasion and money laundering.
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