Section 22 prescribes the closed-list deductions from annual value (computed under s. 21 ) — only two heads: (a) Standard deduction at 30% of annual value (no actual repair receipts required); (b) Interest on borrowed capital (subject to…
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ITA 2025 · Section 22
Section 22 — DEDUCTIONS FROM INCOME FROM HOUSE PROPERTY
Section 22 prescribes the closed-list deductions from annual value (computed under s. 21) — only two heads: (a) Standard deduction at 30% of annual value (no actual repair receipts required); (b) Interest on borrowed capital (subject to ₹2L cap for self-occupied; full deduction for let-out / deemed let-out, with FA 2017 inter-head loss cap of ₹2L u/s 113(3A)).
STATUTORY ARCHITECTURE — Standard Deduction (30%)
The 30% standard deduction operates on a presumptive basis — actual repair / maintenance / collection-charge receipts are NOT required. The assessee gets 30% off the annual value computed under s. 21 irrespective of actual expenditure. This simplifies HP-income computation and prevents micro-management disputes between assessee and AO over actual repair costs.
STATUTORY ARCHITECTURE — Interest on Borrowed Capital
For SELF-OCCUPIED property — interest deduction capped at ₹2,00,000 per FY. For LET-OUT / DEEMED LET-OUT property — full interest deductible (no cap on the deduction itself). However, post FA 2017, HP loss available for inter-head set-off is capped at ₹2L u/s 113(3A); excess is c/f for 8 years against future HP income only. PRE-CONSTRUCTION INTEREST — interest accrued during construction period (before completion year) is allowable in 5 equal annual instalments commencing from the year of completion.
JUDICIAL EVOLUTION — Interest on Repair Loan
Smt. Padmavati Jaykrishna v. CIT, (1987) 166 ITR 176 (SC) — interest on a fresh loan taken to repay an earlier home loan continues to qualify u/s 24(b) [now s. 22(b)] — the chain of nexus to acquisition / construction is preserved.
JUDICIAL EVOLUTION — Apportionment of Interest
DLF Universal Ltd. v. CIT, (2014) 360 ITR 251 (SC) (Delhi HC reference) — interest is allowable in proportion to the borrowed capital actually deployed in each property; co-mingling requires apportionment. AO can pierce co-mingled loan accounts.
JUDICIAL EVOLUTION — Pre-Construction Interest
The Explanation to s. 22(b) [1961 s. 24(b) Explanation] codifies the 5-year amortisation. The CIT v. Wipro Ltd. line of decisions confirms the Explanation's strict construction — pre-construction interest INCURRED is amortised over 5 years from year of acquisition / completion; any earlier claim is disallowed.
DEPARTMENTAL PRACTICE
Section 158 (default new regime) DISALLOWS interest deduction for self-occupied property — practitioners must annually evaluate regime election. Income-tax Rules, 2026 r. 8B / 8BA — annual value computation methodology. Form 16 reflects employer's recognition of employee's HP-loss only up to ₹2L (s. 192/392 with Form 12BB). For excess HP loss, assessee must claim through ITR self-assessment.
PLANNING NOTES & LITIGATION DEFENCE
(i) Maintain a master spreadsheet — loan-to-property mapping, EMI bifurcation (principal + interest), pre-construction tracker. (ii) For new-regime taxpayers (s. 158), interest on self-occupied property is NOT deductible — re-evaluate regime election annually. (iii) For let-out property, full interest deductible against rental income; loss can be set off up to ₹2L against other heads (s. 113(3A) cap), excess c/f. (iv) For under-construction property, interest accrues but is not deductible until completion year; ensure pre-construction interest is claimed in 5 instalments thereafter (cite Wipro). (v) For refinanced home loan (loan to repay earlier loan), cite Smt. Padmavati Jaykrishna for chain-of-nexus continuity. (vi) For multi-property scenarios with pooled loan, segregate loan-to-property allocation in books — cite DLF Universal for proportionate apportionment to defeat AO's blanket aggregation.
CROSS-REFERENCES