Income From House Property - Manisha

INCOME FROM HOUSE
PROPERTY
Submitted by : Apeksha ma’am

Submitted by : Manisha Hirawat
Programme : B.com (H), 3rd sem
BASIC OF CHARGE
The basis of charge of income under the head ‘income
from house property’ is the Annual Value of the property.
Annual Value is inherent capacity of the property to earn
an income. It is the amount for which the property might
reasonably be expected to let from year to year.
Income from house property is charged to tax on
National Basis, as generally tax is not on receipt of
income but on the inherent potential of the house property
to generate income.
CONDITIONS TO BE SATISFIED
The property must consist of buildings or lands
appurtenant to such buildings.
The assess must be the owner of such house property.
The property should not be used by the owner thereof
for the purpose of any business or profession carried
on by him, the profits of which are chargeable to tax.
Computation of Gross Annual Value
(GAV)
Step 1. Calculate expected rent as follows :
PARTICULARS AMOUNT AMOUNT
a) Fair rent of the house xxx

b) Municipal Value of House xxx
c) Whichever is more of (a) and (b) xxx
d) Expected rent xxx
Expected rent ( whichever is less of (c) and xxx
(d)
Contd.
Step 2 : Compare Expected Rent & Actual Rent
Receivable (ARR).
Where the property or any part thereof is let out,  If ARR
is more than ER referred to in Step 1, then, GAV = ARR
 If ARR is less than ER and it is due the vacancy of
property then, GAV = ARR
If ARR is less than ER not owing to vacancy GAV = ER
 Note: ARR = Rent Received / Receivable less Unrealized

Rent
NET ANNUAL VALUE (NAV)
Net Annual Value is the sum computed after
deducting from Gross Annual Value, the taxes levied
by any local authority in respect of the property.
NAV = GAV – Municipal Taxes Paid

MEANING
Municipal Valuation :- For collecting municipal taxes, local
authorities make a periodical survey of all building in their
jurisdiction. Such valuation may be taken as strong evidence
representing the earning capacity of a building.
Fair Rent of the Property :- Fair rent of the property can be
determined on the basis of a rent fetched by a similar property
in the same or similar locality.
 Standard Rent :- Standard rent is the maximum rent which a
person can legally recover from his tenant under a Rent
Control Act.
Self-occupied Property [Sec. 23(2)]
Property is considered to be self – occupied where,
the property consisting of house or part thereof is in the
occupation of the owner for the purposes of his own
residence; or
such property cannot actually be occupied by the owner
by reason of the fact that owing to his employment,
business or profession carried on at any other place, he has
to reside at that other place in a building not belonging to
him.
Contd.
In case of self occupied house property net
annual value is always zero.
Since NAV is zero, the municipal taxes paid
by the owner of the house are not deductible.
DEDUCTION ADMISSIBLE U/S 24
Statutory deduction : 30% of annual value i.e. 30% of
NAV
Interest payable on capital borrowed for acquisition,
construction, repair, renewal, or reconstruction of
house property : actual amount of interest for the year
on accrual basis plus 1/5th of the interest, if any,
pertaining to the pre – acquisition period.
DEDUCTION FOR INTEREST ON CAPITAL BORROWED IN CASE OF SOP
Maximum limit of deduction in respect of interest on

capital borrowed in case of a Self-occupied property
whose annual value is assessed at NIL, is Rs 1,50,000
CASE MAXIMUM
DEDUCTION
Interest on capital borrowed on or after 1-4- 150000
1999 for acquisition or construction of
house
In any other case 30000
Recovery of Unrealized Rent [Section
25AA]
Any amount of rent realized by the assess during the
previous year, which he could not realize from a property
let to a tenant, shall be deemed to be income chargeable
under the head “Income from house property”.
100% of the amount actually received is taxable in the
previous year in which it is realized.
Arrears of Rent [Section 25B]
Arrears of rent shall be deemed to be income chargeable
under the head “Income from house property”. It shall be
charged to income tax as income of previous year in
which it is received.
Taxable amount is computed as under :-
PARTICULARS AMOUNT
The amount received as arrears of rent XXX
Less: 30% of such amount XXX
Amount taxable as arrears of rent XXX
THANK YOU !!!

Income From House Property - Manisha

Uploaded by

Copyright:

Available Formats

Income From House Property - Manisha

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Income From House Property - Manisha

Uploaded by

Copyright:

Available Formats

INCOME FROM HOUSE

Submitted by : Apeksha ma’am

PARTICULARS AMOUNT AMOUNT

a) Fair rent of the house xxx

 Note: ARR = Rent Received / Receivable less Unrealized

NAV = GAV – Municipal Taxes Paid

Maximum limit of deduction in respect of interest on

You might also like