Section 24B of Income Tax Act: A Detailed Guide About Section 24B of Income Tax

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How to Calculate Tax Under Section 24B?

Let’s take an example to compute tax deduction, following the guidelines of Section 24B of the Income Tax Act:

Ms Reema earns an annual salary of ₹ 12,00,000. Apart from it, she earns a rental income of ₹ 2,00,000. On 24th June 2021, she borrowed a loan in which the interest component is ₹ 2,50,000 in a financial year. She invests in tax-savings schemes, where she can avail a maximum deduction of up to ₹ 1,50,000 under Section 80C, whereas the maximum deduction limit under Section 24B is ₹ 2,00,000.

Now, the calculation is as follows:

Particulars	Value
Annual salary	₹ 12,00,000
Add: Rental income	₹ 2,00,000
Total annual income	₹ 14,00,000
Deduct: Deduction on interest paid towards home loan under Section 24B	₹ 2,00,000
Deduct: Deduction under Section 80C	₹ 1,50,000
Taxable income	₹ 10,50,000

Income Tax Slab	Tax Percentage	Tax Amount (in INR)
0-2.5 Lakh	0%	0
2.5-5 Lakh	5%	12,500
5-7.5 Lakh	20%	50,000
7.5-10 Lakh	20%	50,000
10-10.5 Lakh	30%	15,000

A Quick Guide on Section 24B of the Income Tax Act

What Is the Maximum Deduction Limit Under Section 24B?

What Is the Deduction Limit of a Co-Borrower of a Home Loan?

How to Calculate Tax Under Section 24B?

Frequently Asked Questions

✓ Is tax deduction on interest paid before construction or acquisition of a housing property allowed under Section 24B?

✓ Are charges on unpaid interest eligible for tax deduction under Section 24B of the Income Tax Act?

More article about Income Tax in India

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