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T. Banusekar

WILL expenditure incurred on rainwater harvesting be eligible for rebate or deduction in computing income from house property? - Madhavan

Reply

In respect of expenditure incurred on rainwater harvesting, there is no provision in the Act that allows a deduction in computing income from house property. It may however be possible to claim interest on capital borrowed for rainwater harvesting as a deduction in computing income from house property. A rebate is essentially a deduction from the tax liability of an assessee. Expenditure on rainwater harvesting will, therefore, not qualify for any rebate.

In the Income-Tax Act, a deduction is available under Section 24 in computing income from house property. The deductions available under this section are:

A sum equal to 30 per cent of the annual value;

Interest on capital borrowed for purchase, construction, repairs, renewals or reconstruction of a house property.

The deduction available under this section, of a sum equal to 30 per cent of the annual value, is essentially one that is intended for repairs and collection charges. This deduction is available irrespective of the actual expenditure incurred towards repairs and collection charges.

That this deduction is to meet the cost of repairs and collection charges is evident from the fact that the provisions, as they stood earlier, specifically provided for this deduction being for the said purpose. There can be no question of claiming any other expenditure towards repairs or collection charges.

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