39. Restriction on set-off of loss from house property [S. 71]:

Presently, Section 24 allowed expenses to be claimed against income from let-out property without any limit. This could result in losses under the head “Income from House Property”. Further, loss under income from house property is allowed to be set off u/s. 71 during the same year against income earned under other heads. Due to high interest costs, there could be significant losses under the head “Income from House Property” which would bring down the total taxable income.

Finance Bill proposes to restrict the set-off of loss incurred from House Property against income under other heads to the extent of Rs. 2 lakhs.

Example 6: An Indian resident earns income from following sources in FY 2017-18: Source Amount Source   Amount Income from Salary   50,00,000 Income from House Property   (10,00,000) Income from Other Sources   5,00,000  How much House Property loss can be set-off during the year and how much loss can be carried forward? Source   Amount   Amount Income from Salary       50,00,000 Income from House Property   (10,00,000)     Less: Restricted to (S. 71)…       (2,00,000) Income from Other Sources        5,00,000 Gross Total Income       53,00,000 The balance house property loss of Rs. 8,00,000 can be carried forward for 8 years as per S. 79.