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An individual borrows to buy a flat that he lets out throughout tax year 2026-27. Ignoring the separate limit on setting off a loss from house property, how much of the interest for the year is…

Question and options

An individual borrows to buy a flat that he lets out throughout tax year 2026-27. Ignoring the separate limit on setting off a loss from house property, how much of the interest for the year is deductible under section 22 of the Income-tax Act, 2025?

  1. Interest up to ₹30,000

  2. Interest in full, with no ceiling

  3. Interest up to ₹2,00,000

  4. Interest up to 30% of annual value

Answer and explanation

Correct answer: B - Interest in full, with no ceiling

For a let-out property, section 22(1)(b) of the Income-tax Act, 2025 allows the whole interest payable on capital borrowed for the property. The ₹2,00,000 and ₹30,000 ceilings in section 22(2) apply only to houses with nil annual value under section 21(6); a loss from house property is then subject to the separate set-off limit.

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