Q.Mr. Bose took a loan on 1 June 2021 for constructing his self-occupied house. Construction was completed on 15 March 2025. He paid interest of ₹2,40,000 on this loan during the previous year 2025-26. Compute his Income from House Property for AY 2026-27.

For a self-occupied house, Annual Value is Nil, and interest is deductible only up to a ceiling that depends on how quickly construction was completed.

Step 1 — Annual Value: the house is self-occupied throughout the year, so under Section 23(2), Annual Value = Nil, and no Standard Deduction under Section 24(a) applies (30% of Nil is Nil).

Step 2 — Which interest ceiling applies: the loan was taken on 1 June 2021 — during Financial Year 2021-22, which ends on 31 March 2022. Five years from the end of that FY takes us to 31 March 2027. Construction was completed on 15 March 2025, which is WITHIN this 5-year window, and the loan is for CONSTRUCTION, taken after 1 April 1999. All conditions for the higher ceiling are met, so the applicable ceiling is ₹2,00,000.

Step 3 — Deduction: actual interest paid is ₹2,40,000, which EXCEEDS the ₹2,00,000 ceiling, so only ₹2,00,000 is allowed as a deduction.

Students sometimes deduct the full ₹2,40,000 actually paid instead of capping it at ₹2,00,000 — for a self-occupied house, the Section 24(b) ceiling applies regardless of how much interest was actually pa …