Income From House Property

House Property Income

➢ Charging Section 22:

• The Annual Value of property (ALV) comprising of buildings or lands
appurtenant thereto of which the assessee is a owner is chargeable to
tax under the head ‘Income from House Property’.
➢ Exception to the above:
ALV of an assessee engaged in the business of letting out of properties
is to be taxed under the head Business Income.

Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)
Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)
 Q:1 Mrs. Reena commenced construction of house meant for
residential purpose on 01.04.2019. She raised a loan of Rs. 20
lakhs @ 11% per annum from a bank.. The construction was
completed by February, 2021.

Compute the amount of interest allowable under section 24

of the income-tax Act, 1961 in the following cases:

(i) The house was meant for self-occupation from

01.03.2022

(ii) The house was to be let out from 01.03.2022.

(iii) Find out Income from house property.

Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)
Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)
Annual value of the house property is based on the following factors:-

A) Actual rent received or receivable – This is the actual rent

received/receivable by the owner of the house property on letting the house
property.
B) Municipal value – This is the value as determined by the Municipal
authorities for levying Municipal taxes on house property. Municipal
authorities normally charge house tax/Municipal taxes on the basis of annual
letting value of such house property.
C) Fair rent – Fair rent is the rent which a similar property can fetch in the
same or similar locality, if it is let out for a year.
D) Standard rent – The standard rent is fixed under the Rent Control Act. If the
standard rent has been fixed for any property under the Rent Control Act, the
owner cannot be expected to get a rent higher than the standard rent fixed
under the Rent Control Act.
Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)
How to calculate Gross Annual Value
Steps:
1. Calculated expected rent.
Expected rent – Expected rent is the higher value among municipal
value and fair rent subject to a maximum of Standard rent.
2. Gross Annual Value – Expected rent or Actual Rent received which
ever is higher.

Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)
Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)
 Q:2 Mr. Lal is the owner of a property let out
at Rs. 60,000 per month. Municipal value of
this property is Rs. 6,00,000 p.a. Fair Rental
Value is Rs. 5,00,000, Standard Rent is Rs.
5,50,000. The Municipal tax on the property
is Rs. 30,000 annually. He had borrowed a
sum of ` 40 lakhs from Bank for the
construction of the property on which
interest at 8% is payable. What is the
property income of Mr. Lal for the
assessment year 2022-23?
Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)
 House Property Income
Brief Checklist while computing income from house property:
➢ Address of Property
➢ Co-owner/Joint Owner Details (if the property is co-owned)
➢ Rent Agreement
➢ Interest certificate issued by a bank for housing loan/others
➢ Possession Letter
➢ Municipal Taxes Receipt
➢ Form 26AS for TDS Deduction
➢ Details of pre-construction interest paid
Dr. Manju Tyagi ( Ph.D, MBA, M.com, MA, UGC Net, CTET,
UPTET,HTET Qualified)