Deduction in respect of interest on loan taken for residential house property
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 130(1) of Income Tax Act 2025
(1) An assessee, being an individual, shall be allowed a deduction of interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property as per the provisions of this section.
Section 130(2) of Income Tax Act 2025
(2) The deduction under sub-section (1) shall not exceed fifty thousand rupees and shall be allowed in computing the total income of the individual for the tax year beginning on the 1st April, 2016 and subsequent tax years.
Section 130(3) of Income Tax Act 2025
(3) The deduction under sub-section (1) shall be subject to the following conditions:—
(a) the loan has been sanctioned by the financial institution during the period beginning on the 1st April, 2016 and ending on the 31st March, 2017;
(b) the amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees;
(c) the value of residential house property does not exceed fifty lakh rupees; and
(d) the assessee does not own any residential house property on the date of sanction of loan.
Section 130(4) of Income Tax Act 2025
(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other tax year.
Section 130(5) of Income Tax Act 2025
(5) In this section,—
(a) “financial institution” means a banking company to which the Banking Regulation Act, 1949 applies, or any bank or banking institution referred to in section 51 of that Act or a housing finance company; and
(b) “housing finance company” means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.