Chapter IV - Computation of Total Income
Section 22
Section 22: deductions from income from house property
Section 22 sets out deductions used while computing income from house property: 30% of annual value, interest on borrowed capital, and a five-instalment rule for pre-acquisition or pre-construction interest. For a self-occupied property covered by Section 21(6), Section 202(2)(a)(v) excludes the Section 22(1)(b) interest deduction when tax is computed under the default new regime.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) The income under the head “Income from house property” shall be computed after making the following deductions:— (a) 30% of the annual value as determined under section 21; (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital; (c) where the capital referred to in clause (b) is borrowed during any period prior to the tax year in which the property has been acquired or constructed, the amount of any interest payable for the said prior period in five equal instalments for the said tax year and for each of the four immediately succeeding tax years.
(2) In case of property or properties referred to in section 21(6), the aggregate amount of deduction under sub-section (1)(b) and (c) shall not exceed— (a) ₹ 200000, subject to the following conditions:— (i) the property has been acquired or constructed with borrowed capital and such acquisition or construction is completed within five years from the end of tax year in which capital was borrowed; (ii) the assessee furnishes a certificate from the person to whom interest is payable on such capital; and (b) ₹ 30000 in any other case.
(3) The deduction under section 22(1)(c) shall be computed after reducing the interest referred to in the said section by any amount already allowed as a deduction under any other provisions of this Act.
(4) The certificate referred to in sub-section (2) shall specify— (a) the amount of interest payable on capital borrowed; and (b) the interest payable on any new loan, where subsequent to the capital borrowed, the assessee has taken any such loan for repayment of whole or any part of such capital.
(5) The aggregate of the amounts of deduction under sub-section (2) in respect of properties of the nature referred to in section 21(6) shall not exceed ₹ 200000.
(6) Any interest chargeable under this Act which is payable outside India shall not be allowed as a deduction under this section, if— (a) tax has not been paid or deducted on such interest under Chapter XIX-B; and (b) in respect of such interest, there is no agent in India as per section 306.
Introduction
The house-property head is computed from annual value after the deductions specified here. The standard allowance and qualifying borrowing interest have different bases and conditions.
Key takeaways
Two deduction categories
House-property income is computed after a deduction of 30% of annual value and interest payable on eligible borrowed capital, subject to the section's conditions.
Interest before acquisition or construction
Eligible interest for the period before the tax year of acquisition or construction is spread over five equal instalments.
Self-occupied cap
For property covered by Section 21(6), the aggregate interest deduction is capped at the applicable statutory amount and depends on the specified conditions.
Deductions under subsection (1)
Section 22(1) allows the following deductions in computing income from house property:
- 30% of the annual value determined under section 21 - a flat standard deduction
- Interest payable on capital borrowed for acquiring, constructing, repairing, renewing or reconstructing the property
- Interest payable for the period before the tax year in which the property was acquired or constructed ("pre-construction interest"), claimed in five equal instalments starting from the tax year of acquisition/construction and the following four tax years
Cap for self-occupied property (section 21(6) cases)
For property covered by the self-occupied nil-annual-value rule in section 21(6), section 22(2) caps the aggregate interest deduction under section 22(1)(b) and (c) at:
These are Section 22 limits, not a guarantee that each deduction can be claimed under every tax regime. Section 202(2)(a)(v) expressly disallows the Section 22(1)(b) deduction for a Section 21(6) property when tax is computed under the default new regime.
| Condition | Cap |
|---|---|
| Property acquired/constructed with borrowed capital, with acquisition/construction completed within 5 years from the end of the tax year the capital was borrowed, and a certificate of interest payable is furnished | ₹2,00,000 |
| Any other case | ₹30,000 |
Other rules in this section
The pre-construction interest deduction under section 22(1)(c) is computed after reducing it by any amount already allowed as a deduction under any other provision of the Act (section 22(3)).
The certificate mentioned above must specify the interest payable on the capital borrowed, and the interest payable on any new loan taken to repay the original borrowed capital (section 22(4)).
Where an assessee has more than one self-occupied property under section 21(6), the aggregate deduction across all such properties under section 22(2) cannot exceed ₹2,00,000 (section 22(5)).
Interest chargeable under this Act but payable outside India is not deductible under this section if tax has not been deducted/paid on it under Chapter XIX-B and there is no agent in India for it under section 306 (section 22(6)).
Step-by-step flow for applying Section 22
- 1
Compute the annual value under Section 21
- 2
Deduct the standard 30% of annual value (Section 22(1)(a))
- 3
Was the property acquired, constructed, repaired, renewed or reconstructed with borrowed capital?
- No: No interest deduction.
- Yes: Deduct current-year interest (clause (b)), plus one-fifth of pre-acquisition or pre-construction interest for five years (clause (c)).
- 4
Is it a self-occupied property referred to in Section 21(6)?
- Yes: Interest is capped at ₹2,00,000 if the acquisition or construction is completed within five years and a lender's certificate is obtained; otherwise ₹30,000. The aggregate cap for all such properties is ₹2,00,000.
- No (let out): No cap under Section 22(2).
- 5
Is interest payable outside India without TDS and without an agent in India?
- Yes: Not deductible (Section 22(6)).
Practical checklist
Do
- Compute annual value under Section 21 before applying the Section 22 deductions.
- Retain lender certificates showing borrowing and replacement-loan interest.
- For Section 21(6) properties, apply the aggregate ₹2 lakh interest limit where applicable.
Avoid
- Do not deduct the same borrowing interest again under another provision.
- Do not assume foreign interest is deductible if withholding and agent conditions are unmet.
Illustrative example
Worked example: let-out flat bought with a home loan
Hypothetical facts (illustration only, not a real taxpayer): Ms. Pillai owns a flat bought with a bank loan and lets it out. Its annual value under Section 21 is ₹3,00,000. Interest for the current year is ₹2,40,000. Interest of ₹1,00,000 was paid before the year in which she acquired the flat.
Standard deduction
30% of ₹3,00,000 = ₹90,000.
Current interest
₹2,40,000 under clause (b); no Section 22(2) cap because the flat is let out.
Pre-acquisition interest
One-fifth of ₹1,00,000 = ₹20,000 this year (and for each of the next four years).
Outcome
- Income from house property = ₹3,00,000 - ₹90,000 - ₹2,40,000 - ₹20,000 = loss of ₹50,000.
- Under the Section 202 default regime, this loss cannot be set off against other heads; check the regime before relying on the set-off.
Glossary
- Standard deduction
- The fixed percentage allowance under Section 22 against house-property annual value.
- Pre-construction interest
- Qualifying borrowing interest from before acquisition or construction, spread as the section directs.
Frequently asked questions
What is the standard deduction for house property income?
A flat 30% of the annual value as determined under section 21 - this applies regardless of the property's actual maintenance expenses.
What is the maximum home loan interest deduction for a self-occupied house?
Where the Section 22 interest deduction is available, the limit is ₹2,00,000 if the acquisition or construction is completed within five years from the end of the tax year in which the loan was taken and an interest certificate is furnished; otherwise it is ₹30,000. The overall Section 22(5) cap across self-occupied properties is ₹2,00,000. Under the default new regime, Section 202(2)(a)(v) excludes Section 22(1)(b) interest for properties covered by Section 21(6).
Can I claim interest paid before I actually acquired or built the house?
Yes - pre-construction/pre-acquisition period interest is deductible, but spread equally over five tax years starting from the year of acquisition or completion of construction.
Need help applying this provision to your situation?
Talk to our tax team about this sectionLast updated 10 October 2026