Restriction on set-off of loss from House property [Finance Act 2017]


Restriction on set-off of loss from House property [Finance Act 2017]
Section 24 (B) (Loss under the head Income from House Property)
Deduction on amount of interest is allowed U/S 24(b) of Income Tax Act 1951 where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital.
– Till FY 2016-17, interest paid on your housing loan was eligible for the following tax benefits ;
Interest paid on the loan taken for all the houses were allowed as deductions.
After these deductions, the rental income can be NIL or NEGATIVE and is called ‘loss from house property’ in the latter case.
Such negative income or loss was allowed to be set off against other heads of income like Income from Salary or Business etc. which helped Tax Payer to lower their tax liability substantially.
Changes made by Finance Act 2017

Restriction on set-off of loss from House property [Finance Act 2017]

Section 71 of the Act relates to set-off of loss from one head against income from another.
Sub-section (3A) was inserted in the said section to provide that set-off of loss under the head
Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head “Income from house property” is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to set off such loss, to the extent the amount of the loss exceeds two lakh rupees, against income under the other head.”
However, the unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years in accordance with the existing provisions of the Act.
This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year 2018-19 and subsequent years.
This means that
The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of the cases, this can be treated as ‘dead loss‘.
This is a major blow to the investors who have bought multiple houses on home loan(s) with an intention to save taxes alone.

Relevant Link:
Income Tax Login
Link Adhar


You May Also Refer:

Deductions from gross total income under section 80C to 80 U of Income Tax Act 1961

Last date for Filing ITR of FY 2015-2016 and 2016-2017 : 31st March, 2018


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