Section 22 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 22 lists the only deductions allowed in computing income from house property: a deduction of 30% of the annual value, interest on borrowed capital, and pre-construction interest spread over five years. For houses covered by section 21(6), the interest deduction is capped. This article follows the Income-tax Act, 2025 as amended by the Finance Act, 2026.
After the annual value is fixed under section 21, section 22(1) allows 30% of the annual value and interest payable on borrowed capital, plus pre-construction interest in five equal instalments. For properties referred to in section 21(6), the total of the interest deductions cannot exceed Rs. 2,00,000 if the acquisition or construction is completed within five years and a lender's certificate is furnished, and Rs. 30,000 in any other case. Later amendments, rules and notifications should be checked.
Starting point
The figures below feed straight into your income tax return filing. The annual value is fixed under section 21, and the charge arises under section 20. Section 22(1) says the income under the head "Income from house property" is computed after making the deductions below.
Section 22(1): the three deductions
| Clause | Deduction |
|---|---|
| (a) | 30% of the annual value as determined under section 21 |
| (b) | Where the property is acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on that capital |
| (c) | Where that capital is borrowed during any period before the tax year in which the property is acquired or constructed, the interest payable for that prior period, in five equal instalments for that tax year and each of the four immediately succeeding tax years |
Clause (a) is a percentage of the annual value, whatever repairs were actually done. Clause (b) is interest "payable", so it does not depend on actual payment in the tax year. Clause (c) covers the interest of the period before the property is acquired or constructed and allows it over five tax years.
Section 22(2): the cap for section 21(6) properties
In the case of a property or properties referred to in section 21(6) (the houses with nil annual value because the owner occupies them, or cannot actually occupy them), the aggregate deduction under sub-section (1)(b) and (c) shall not exceed:
- (a) Rs. 2,00,000, subject to these conditions:
- (i) the property has been acquired or constructed with borrowed capital and the acquisition or construction is completed within five years from the end of the tax year in which the capital was borrowed; and
- (ii) the assessee furnishes a certificate from the person to whom interest is payable on that capital; and
- (b) Rs. 30,000 in any other case.
The Finance Act, 2026, w.e.f. 1-4-2026, substituted the words "sub-section (1)(b) and (c)" for "sub-section (1)(b)". As printed now, the cap is applied to clauses (b) and (c) together, so pre-construction interest counted under clause (c) is inside the ceiling.
Section 22(3): no double deduction
The deduction under section 22(1)(c) is computed after reducing the interest by any amount already allowed as a deduction under any other provision of the Act.
Section 22(4): what the certificate shows
The certificate referred to in section 22(2) must specify:
- (a) the amount of interest payable on the capital borrowed; and
- (b) the interest payable on any new loan, where after the capital was borrowed the assessee took a new loan to repay the whole or part of that capital.
Section 22(5): overall ceiling
The aggregate of the amounts of deduction under sub-section (2), for properties of the nature referred to in section 21(6), shall not exceed Rs. 2,00,000. So even if a person has two self-occupied houses, each with its own loan, the total interest deduction for them together stops at Rs. 2,00,000.
Section 22(6): interest payable outside India
Interest chargeable under the Act that is payable outside India is not allowed as a deduction under this section if (a) tax has not been paid or deducted on that interest under Chapter XIX-B, and (b) there is no agent in India for that interest as per section 306. Both conditions must exist for the disallowance to apply.
How the pieces fit: a worked example
The names and amounts are assumed. Kavita owns a flat let to a tenant. After section 21, the annual value is Rs. 3,00,000. She borrowed capital to construct the flat; interest payable for the tax year is Rs. 1,60,000.
- Section 22(1)(a): 30% of Rs. 3,00,000 = Rs. 90,000
- Section 22(1)(b): interest payable = Rs. 1,60,000
- Total deductions = Rs. 2,50,000
- Income from house property = Rs. 3,00,000 less Rs. 2,50,000 = Rs. 50,000
The Rs. 2,00,000 limit does not apply because her flat is let and is not a section 21(6) property.
Now take Sameer, who occupies his own house, bought with a loan. The house is completed within five years from the end of the tax year in which he borrowed, and his lender gives the certificate. Interest payable for the tax year is Rs. 2,40,000. The annual value is nil, so clause (a) gives nothing. The interest deduction is limited to Rs. 2,00,000, so he has a loss of Rs. 2,00,000 under this head. If the certificate were not furnished, the limit would be Rs. 30,000.
Common mistakes
- Applying the Rs. 2,00,000 limit to a let property. The limit is for properties referred to in section 21(6).
- Missing the certificate under section 22(2)(a)(ii). Without it, the lower Rs. 30,000 applies.
- Forgetting that the Rs. 2,00,000 limit now covers clauses (b) and (c) together.
- Claiming pre-construction interest in one year instead of five equal instalments.
- Claiming the same interest under another provision as well. Section 22(3) prevents it for clause (c).
Need help with house property income?
Interest certificates, pre-construction interest and the choice of self-occupied houses are easy to get wrong in a return. We can check the figures before you file through our income tax return filing service, or advise on the holding structure under tax planning advisory.
Key takeaways
- 30% of annual value and interest on borrowed capital are the core deductions.
- Pre-construction interest is allowed in five equal instalments.
- For section 21(6) properties, the interest cap is Rs. 2,00,000 (with conditions) or Rs. 30,000 in any other case.
- The cap now applies to section 22(1)(b) and (c) together (Finance Act, 2026, w.e.f. 1-4-2026).
- The total for all such properties together cannot exceed Rs. 2,00,000.
Read next
- Section 20: income from house property
- Section 21: annual value
- Section 23: arrears of rent and unrealised rent
- Section 24: property owned by co-owners
- Section 25: who is a deemed owner
- Where the earlier Act's house property provisions sit in the 2025 Act
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.