The deduction of interest on account of borrowed capital invested in the acquisition or
construction of a house is prescribed in the proviso to sub-section (2) of section 24 in
regard to self-occupied residential houses.
The ceiling of deduction presently stands at Rs 30,000. To give a boost to the house
building activity and encourage construction of more residential units to meet the
increasing housing needs, the deduction of interest has been enhanced.
If the loan has been taken for construction or acquiring a residential unit on or after
1.4.99 and the construction of the residential unit out of such loan has been completed
before 1.4.2001, the deduction on account of interest on such loans can be availed up to a
limit of Rs 75,000.
The amendment will take effect from April 1st, 2000 and will, accordingly apply to
assessment year 2000-2001 and subsequent years. The Government has since decided to extend
this concession even beyond 2001.
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