INCOME FROM
HOUSE PROPERTY
SUBMITTED BY :
SAKSHAM JAISWAL
ACKNOWLEGEMENT
I am using this opportunity to express my
gratitude to everyone who supported me in
preparing this presentation . I am thankful for
their aspiring guidence , invaluably constructive
criticism and friendly advice to prepare this
presentation . I am sincerely grateful to them for
sharing their truthful and illuminating views on
a number of issues related to the presentation .
I express my warm thanks to Ms.Sakshi Chauhan
for their support and guidance.
CHARGEABILITY [SECTION 22]
The following three conditions must be satisfied
before the income of the property can be taxed
under the head Income from House Property :
1.The property must consist of buildings and lands
appurtenant thereto,
2.The assessee must be the owner of such house
property,
3.The property may be used for any purpose, but it
should not be used by the owner for the purpose of
any business or profession carried on him, the profit
of which are chargeable to tax .
Deemed Ownership [Section 27]
The following persons though not the legal owners of a
property are deemed to be the owners :
Transfer to a spouse
[Section 27(i)]
Member of a Cooperative Society, etc.
[Section 27(iii)]
Transfer to a minor
child
Holder of a impartible
estate
[Section 27(i)]
[Section 27(ii)]
Person in possession of
a property
Person having right in a
property for a period
not less then 12 years
[Section 27(iiia)]
[Section 27(iiib)]
Composite Rent
In certain cases, the owner charges rent
from the tenant not only on account of rent
for the house property but also on account
of service charges for various facilities
provided with the house. Such rent is
known as composite rent.
When income from house property
is not charged to tax
Farm house
Property held for charitable purpose
INCOME
DERIVED
FROM
House property used for own business/profession
Self occupied house
House property of registered trade union
Place of ex-ruler
What is Annual Value?
As per section 23(1)(a), the annual
value of any property shall be the
sum for which the property might
reasonably be expected to be let
from year to year.
It may neither be the actual rent
derived or the notional rent which
could have been derived, had the
property been let.
Computation of annual value of
a property [Section 23(1)]
Gross Annual Value
Less : Municipal Taxes paid
Annual value
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Different categories of
properties
The annual
value has to
be
determined
for different
categories of
properties.
These are:
House property which is let throughout
the previous year
House property which is let and was
vacant during whole or any part of
previous year.
House property which is part of the year
let and part of the year self occupied.
House property which is self occupied
for residential purposes or could not
actually be self occupied owing to
employment in any other place.
(A)House property which is let
throughout the previous year
In determining the annual value
there are four factors which are
normally taken into
consideration. These are:
Actual rent received or receivable
Municipal Value
Fair rent of the property
Standard rent
Determination of Gross Annual
Value
G.A.V
HIGHER
Expected rent
Actual rent
Higher
Municipal value
Fair rent
(B) House which is let and was vacant
during the whole or part of previous
year
Situation 1
Where actual rent received is higher than expected rent
G.A.V
Higher
Value
Actual
rent
Expected
rent
Situation 2
Owing to such vacancy, the actual rent
received or receivable is less than the
expected rent,
In this case, the gross annual value shall be
the actual rent received or receivable.
G.A.V
Actual rent
(C). House property which is part of the year
let and part of the year occupied for own
residence
Its annual value shall be determined as per the
provisions relating to let out property.
In this case, the expected rent shall be taken for full
year but the actual rent received or receivable shall be
taken only for the period let.
G.A.V
Higher Value
Actual rent
Expected rent
Unrealised Rent
The amount of rent which the owner cannot realise from
tenant.
Treatment of unrealized rent
The actual rent received or receivable shall not
include the amount of rent which the owner cannot
realize, subject to the rules made in this behalf . It
should be deducted from clause (b) or (c) of section
23(1).
Deduction from Income from
House Property
Standard deduction: From the net annual value
computed, the assessee shall be allowed a standard
deduction of a sum equal to 30% of the net asset value.
Interest on borrowed capital : Where the property has
been acquired , constructed etc. with borrowed capital
,the amount of interest paid on such borrowed capital is
allowed as deduction . [ Circular No. 363,dated 24.6.1983]
Interest on pre construction
period
Interest attributable to the period prior to
completion of construction: In such a case
interest paid/payable for the period prior to
the previous year in which the property is
acquired/constructed will be aggregated and
allowed in five successive financial year .
(D). Computation of income of a property which
is self occupied for residential purposes or could
not actually be self occupied owing to
employment
Where the annual value of such house shall be nil:
Where the property consists of a house or a part of a
house which:
is in the occupation of the owner for the purposes of
his own residence and no other benefit is derived
there from; or
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 .
Where assessee has more than
one house for self-occupation
If there are more than one residential houses, which are
in the occupation of the owner for his residential
purposes then he may exercise an option to treat any one
of the houses to be self occupied .
The other house(s) shall be deemed to be let out and
the annual value shall be the sum for which the
property might reasonably be expected to let from year
to year.
Deduction in respect of one selfoccupied house where annual value
is Nil
However, the assessee will be allowed deduction on
account of interest as under:
(a) Where the property is acquired or constructed with capital
borrowed on or after 01/04/1999 and such acquisition or
construction is completed within 3 years of the end of the
financial year in which the capital was borrowed: Actual
interest payable subject to maximum of Rs 150,000
(b) In any other case, i.e. borrowed for repairs or
renewal or conditions mentioned in clause (a) are not
satisfied: Actual interest payable subject to a
maximum of Rs 30,000
Computation of Annual value of
one self occupied property
Gross Annual Value
Less: Municipal Tax paid
NET ANNUAL VALUE
Less: Standard Deduction
Less: Interest on borrowed capital
Income from Self occupied Property
NIL
NIL
NIL
NIL
Deductible
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House property owned by Coowners [Section 26]
If a house property is owned by two or more persons, then
such persons are known as co-owners. When the share of
each co-owner is definite and ascertainable, it has been
provided that each of the owners will be assessed
individually in respect of share of income from the
property.
When each of the co-owners of a property uses it for his
residence, each of them will also get the concessional
treatment in respect of one self occupied property.
Loss from house property
There can be loss under the head income from house
property
(i) In the case of a self-occupied property, the
annual value is taken as nil.
(ii) In respect of any other house property, there can be loss
under this head in respect of such properties due to municipal
taxes as well as deductions. Similarly, deductions under section 24
in case of property deemed to be let out can be more than net
annual value.
Determination of Income from
House Property
Gross Annual Value
Less: Municipal Taxes
Net Annual Value
Less: Deduction under section 24
Standard Deduction (@30%)
Interest on borrowed capital
Income from House Property
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Name - SAKSHAM JAISWAL
Reg. No. -CRO0475610
Batch No. - 83
