All Courses are free for limited time.
NISM Professor

Section 24

The Income Tax Act deduction for interest paid on a housing loan taken to buy, build or repair a property, for loans taken after 1 April 1999.

In plain language

Buying a house on a loan means paying interest for years, and Section 24 is the tax provision that gives some relief for that interest.

The workbook's own words: interest paid on housing loan availed for purposes of acquisition of property, construction of property or repair of property. It sits in the same table as Section 80C, 80D and 80G, as one more deduction available under the Income Tax Act, 1961.

There is one date condition attached to it: it is applicable on housing loans availed after April 1, 1999.

How it works

The workbook places Section 24 in its Chapter 10 table of deductions, alongside Section 80C (investment-linked deductions), Section 80D (medical insurance) and Section 80TTA (savings account interest). Unlike those sections, the workbook does not state a rupee ceiling for the Section 24 deduction in this booklet — only the qualifying purposes (acquisition, construction or repair of property) and the date condition (loans taken after 1 April 1999).

The workbook closes its tax chapter with a general caution that applies squarely here: dates, limits and other conditions related to the Income Tax Act are subject to change, and readers are advised to check the latest provisions issued by the Government from time to time.

If you need the rupee limits, they are in another paper. Series X-B's chapter 7 sets the self-occupied ceiling at Rs 2,00,000, falls back to Rs 30,000 where construction ran past five years, and places no cap on a let-out property; it also splits interest paid before completion into five equal instalments. Those figures are taught on pre-construction interest, named there as X-B's text. Answer this paper's question from this paper: if the question comes from a booklet that gives no ceiling, the qualifying purposes and the 1 April 1999 date are what it is testing.

A worked example

Nikhil takes a housing loan in 2022 to construct a house on a plot he owns, and pays interest of Rs 1,80,000 in one financial year.

Because his loan was taken well after the 1 April 1999 cut-off the workbook states, and the loan was used for construction of the property, the interest qualifies for a deduction under Section 24. This workbook does not state the rupee ceiling on that deduction, so Nikhil checks the current Income Tax Department guidance, exactly as the workbook's own closing caution advises, rather than assuming any specific limit from this booklet.

Had Nikhil's loan instead been taken before 1 April 1999, the workbook's stated date condition would put it outside what this section, as described here, covers.

Why NISM asks about it

Chapter 10 (Tax Saving Options) lists Section 24 in its deductions table, immediately after Section 80TTA. Expect a recall question on the qualifying purposes — acquisition, construction or repair — and the 1 April 1999 date condition.

Common exam traps

  • The workbook gives no rupee ceiling for the Section 24 deduction — do not answer a question with a specific limit unless the question itself states one.
  • The loan must be for acquisition, construction or repair of property — a loan for an unrelated purpose secured against property is not what this section, as described here, covers.
  • The date condition is loans availed after 1 April 1999 — this workbook does not extend the deduction to loans before that date.
  • Section 24 is a separate deduction from Section 80C, which the same table lists for the principal repayment of a housing loan, not the interest.

Check yourself

  1. 1.Section 24 allows a deduction for interest on a housing loan taken for which purposes, and subject to what date condition?

    1. a)Acquisition only; loans availed after 1 April 2009
    2. b)Acquisition, construction or repair of property; loans availed after 1 April 1999
    3. c)Acquisition or construction only; no date condition
    4. d)Any purpose; loans availed after 1 April 1961
    Show the answer

    Answer: (b) Acquisition, construction or repair of property; loans availed after 1 April 1999

    "Interest paid on housing loan availed for purposes of ACQUISITION OF PROPERTY, CONSTRUCTION OF PROPERTY OR REPAIR OF PROPERTY. Applicable on housing loans availed AFTER APRIL 1, 1999." Three purposes, so a renovation loan qualifies and not only a purchase — a point families often miss. And the date condition is 1 April 1999. Keep this section firmly apart from 80C, which covers the principal repayment of the same loan: one instalment, two sections. On a loan only a few years old the interest is much the larger component, so a borrower who claims the whole EMI under 80C forfeits the bigger deduction — and 80C is crowded anyway, since it also holds life insurance, provident fund, ELSS, five-year special bank deposits, NPS Tier 1 and NSC, while Section 24 competes with none of them.

  2. 2.Which of the following is NOT listed under Section 80C?

    1. a)Principal repayment of a housing loan
    2. b)ELSS schemes of mutual funds
    3. c)Interest paid on a housing loan
    4. d)Contribution to an NPS Tier 1 account
    Show the answer

    Answer: (c) Interest paid on a housing loan

    Section 80C covers "money invested in LIFE INSURANCE, PROVIDENT FUND, ELSS SCHEMES OF MUTUAL FUND, SPECIAL BANK DEPOSITS OF 5 YEAR TERM, CONTRIBUTION TO NPS ACCOUNT (TIER 1 ACCOUNT ONLY), NATIONAL SAVINGS CERTIFICATE, PRINCIPAL REPAYMENT OF HOUSING LOAN, etc." Housing loan interest is not there — it belongs to Section 24, which covers "interest paid on housing loan availed for purposes of acquisition of property, construction of property or repair of property" for loans "availed after April 1, 1999." Splitting the EMI correctly is the most valuable habit in this chapter, because on a young loan the interest is much the larger half and would be lost if both were claimed under 80C. Note also the three cross-links: the five-year Special Bank Deposit is Chapter 4's scheme, NPS Tier 1 only restates Chapter 7's tier table, and the NSC is Chapter 9's certificate.

  3. 3.During a year a borrower repaid ₹1,40,000 of housing loan principal and paid ₹2,60,000 of interest on a loan taken in 2021. How should the ₹4,00,000 be treated?

    1. a)The whole ₹4,00,000 under Section 80C
    2. b)₹1,40,000 under Section 80C and ₹2,60,000 under Section 24
    3. c)The whole ₹4,00,000 under Section 24
    4. d)₹2,60,000 under Section 80C and ₹1,40,000 under Section 24
    Show the answer

    Answer: (b) ₹1,40,000 under Section 80C and ₹2,60,000 under Section 24

    A single EMI does two different things and the Act treats them separately. Principal is among the 80C items — "…PRINCIPAL REPAYMENT OF HOUSING LOAN, etc." Interest falls under Section 24 — "INTEREST PAID ON HOUSING LOAN availed for purposes of acquisition of property, construction of property or repair of property", applicable to loans "availed after April 1, 1999", which a 2021 loan comfortably satisfies. Getting this wrong is expensive in life as well as in the exam: on a loan only three years old the interest is by far the larger half — ₹2,60,000 against ₹1,40,000 here — so claiming everything under 80C forfeits the bigger deduction. There is a second reason the split matters: 80C is a crowded basket that also holds life insurance, provident fund, ELSS, five-year special bank deposits, NPS Tier 1 and NSC, so ₹1,40,000 of principal may already fill much of it, while Section 24 competes with none of those.

Where this is taught

Free preparation for NISM Series SEBI-ICE

Related terms

← All terms
Something look wrong? Report it