DEDUCTION FROM ANNUAL VALUE SECTION (24)

DEDUCTIONS FROM ANNUAL VALUE [SECTION 24]

(1) There are two deductions from annual value. They are –

(a) 30% of NAV; and

(b) Interest on borrowed capital 

30% of NAV is allowed as deduction under section 24(a)

(a) This is a flat deduction and is allowed irrespective of the actual expenditure incurred.

(b) The assessee will not be entitled to deduction of 30%, in the following cases, as the
annual value itself is nil.

(i) In case of self-occupied property or

(ii) In case of property held as stock-in-trade and the whole or any part of the property
is not let out during the whole or any part of the previous year, upto 1 year from the
end of the financial year in which certificate of completion of construction of the
property is obtained from the competent authority.

Interest on borrowed capital is allowed as deduction under section 24(b)

Interest payable on loans borrowed for the purpose of acquisition, construction, repairs,
renewal or reconstruction can be claimed as deduction.
Interest payable on a fresh loan taken to repay the original loan raised earlier for the
aforesaid purposes is also admissible as a deduction.

Interest for pre-construction period:

Pre-construction period is the period prior to the previous year in which property is acquired
or construction is completed.

Interest payable on borrowed capital for the period prior to the previous year in which the
property has been acquired or constructed (Pre-construction interest), can be claimed as
deduction over a period of 5 years in equal annual installments commencing from the year of
acquisition or completion of construction.

Interest for the year in which construction is completed:

Interest relating to the year of completion of construction can be fully claimed in that year
irrespective of the date of completion.