INCOME TAX

PRESENTATION
Prepared by:
Ishaan Dua (2K19/BBA/39)
Harshit Bhatia (2K19/BBA/35)

Income From House Property

 TABLE OF CONTENTS

1. INTRODUCTION 4. ER CONDITION

2. BASIS OF CHARGE
5. FORMAT

3. IMPORTANT TERMS
6. TYPES OF INCOME FROM
HOUSE PROPERTY
 INTRODUCTION
Ø The rent that is received from any property is taxable under income from house
property. The Income Tax Act of India categorizes income into four different
heads and income from house property is one of them.
1. LET-OUT
2. SELF-OCCUPIED
3. DEEMED TO BE LET OUT
4. VACANT FOR WHOLE YEAR
 BASIS OF CHARGE
Ø Income is taxable under head “Income from house property” if following
conditions are satisfied:
1. The property should consist of any building or lands appurtenant thereto.
(Land attached to building)
2. The assessee should be owner of the property.
3. The property should not be used by the owner for the purpose of any business
or profession carried on by him, the profits of which are chargeable to tax
 IMPORTANT TERMS

GROSS ANNUAL VALUE

TYPES OF RENT DEDUCTIONS

[Fair Rent, Expected Rent,
Actual Rent, Standard Rent]

OWNER/DEEMED OWNER MUNICIPAL VALUE

 EXPECTED RENT CONDITIONS
ER = MV OR FR whichever is higher but not exceeding SR

EX. MV =4,00,000, FR= 6,00,000,

SR = NOT GIVEN.
ANSàEXPECTED RENT = 4,00,000 OR 6,00,000 = HIGHER= 6,00,000

EX. MV= 2,00,000, FR= 4,00,000, SR= 1,00,000

ANSàEXPECTED RENT= 1,00,000
FORMAT
01
LET OUT
Ø A property which is given by the owner to the tenant for some consideration is treated as a let
out property . In case a person has more than one self occupied property then only one
property shall be treated as self occupied and others shall be treated as deemed to be let out
property.
Ø Example for Calculation of Income from Let-Out House Property
Sita owns a house property which is let out throughout the year. Municipal Value is INR 1,45,000,
Fair rent INR 1,36,000, standard rent INR 1,24,000 and actual rent received INR 1,15,000.Municipal
taxes paid by the tenant INR 5,400. Interest on home loan paid INR 3,50,000. SIta also has income
from Business of INR 7,12,000.
 02
SELF OCCUPIED
Ø Prior to Budget 2019, when an assessee own more than one residential houses, only is
considered as self -occupied and other was considered as deemed let-out. After Budget 2019,
an assessee can own two houses as self-occupied houses and more than two houses will be
considered as deemed let out.
Ø Example for Calculation of Income from Self-Occupied House Property
To understand how income is computed for self occupied properties , let's take an example:
Mohan owns a house property , municipal value of which is INR 2,50,000 and municipal tax paid
by him is INR 53,000. Interest on home loan paid by Mohan is INR 2,88,000. Compute income of
Mohan.
 03
DEEMED TO BE
LET OUT
Ø As per the income tax act, assessee can declare 2 house properties as Self-occupied while
he/she has to compulsorily declare all others as rented out. It means the subsequent
properties are considered as deemed let out House Property.

Ø The whole idea of deemed to be let out is to determine how many houses a person own
and determine how much tax will be charged on each of these properties.
 04
VACANT
PROPERTY
Ø If the property or any part of property is let out and was vacant during the whole or part of
the year and due to such vacancy, the actual rent is less than the expected rent, then the
actual rent will be considered as Gross Annual Value of the property.

Ø Under Income Tax Act, 1961 only one house property is treated as Self occupied property.
The remaining properties are treated as Deemed to be let out property. Vacant property is
also treated as Deemed to be let out property.
THANK YOU