Income from flouse Property

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 What is house property?
CHENNAI
3rd Floor, ‘Creative Enclave’, • House property means any building of which the
148-150, Luz Church Road,
Mylapore, assessee is the owner. Ownership of the building is must in
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 case of calculation of income from house property.
BANGALORE
Suite 920, Level 9,
• Notes:
•
Raheja Towers, 26-
27, M G Road, Income from sub-letting of the house property is taxable under
Bangalore - 560 001.
Tel: +91 - 80 - 6546
2400
the head “Income from other sources”.
COIMBATORE
BB1, Park Avenue, • If rent of furniture is also received along with the house rent,
the rent from furniture will be treated as “Income from other
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
sources” not as income from house property.
• Meaning of Annual Value:- annual value of house property
means the sum which might reasonably be expected to fetch if
the property is let from year to year.

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 Incomes to be treated as
income from house property
• Followings are some incomes which are to included in
the income from house property:-

• Rental Income from any farm house or agriculture land

for any purpose other than agriculture.
• Any arrears of rent, which has not been taxed,
received in subsequent year, shall be taxable as
income from house property in the year of receipt.
• Any unrealized rent received in subsequent year, will
be added in rental income without any deduction.
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 Incomes not to be treated as income
from house property
CHENNAI
3rd Floor, ‘Creative Enclave’,

148-150, Luz Church Road,

• Following are some incomes which are not
the part of income from house property:-
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821

BANGALORE
Suite 920, Level 9,
Raheja Towers, 26-
• House property used for business purpose.
• Rent received from vacant land.
27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546
2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
• Income from house property in the
Coimbatore - 641018.
Tel: +91 - 422 – 6552921 immediate vicinity of agricultural land and
is used as a store house or dwelling house
etc. by the cultivators.
• Any unrealized rent shall not be included in
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 Essential conditions for taxing income
under this head
CHENNAI
3rd Floor, ‘Creative Enclave’,
• The following three conditions must be satisfied
before the income of the property can be taxed
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 under the head “Income from House Property”
BANGALORE
Suite 920, Level 9,
Raheja Towers, 26-
27, M G Road,
Bangalore - 560 001. • The property must consist of buildings and lands
Tel: +91 - 80 - 6546
2400 appurtenant thereto
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
• The assessee must be the owner of such house
Coimbatore - 641018.
Tel: +91 - 422 – 6552921 property
• 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 by him, the
profit of which is chargeable to tax. If the property is
used for own business or profession, it shall not be
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chargeable to tax. Ownership includes both free-
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hold and lease-hold rights and also includes deemed
www.altacit.com ownership
 Tax Chargeability [Sec. 22]
CHENNAI
3rd Floor, ‘Creative Enclave’,

148-150, Luz Church Road, • The annual value of property consisting of any
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 building or lands appurtenant thereto of which
BANGALORE
Suite 920, Level 9,
the assessee is the owner shall be subject to
Raheja Towers, 26-
27, M G Road, Income-tax under the head „Income from House
Bangalore - 560 001.
Tel: +91 - 80 - 6546
2400
Property‟ after claiming deduction under Sec. 24,
COIMBATORE
BB1, Park Avenue, provided such property or any portion of such
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
property is not used by the assessee for the
purpose of any business or profession, carried on
by him, the profits of which are chargeable to
Income-tax.

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 Deductions from income from
house Property [Sec.24]
CHENNAI
3rd Floor, ‘Creative Enclave’, • Income chargeable under the head “Income from
148-150, Luz Church Road,
Mylapore,
house property” shall be computed after making the
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
following deductions, namely:-
BANGALORE • i) Standard deductions:- From the net annual value
Suite 920, Level 9,
Raheja Towers, 26- computed, the assessee shall be allowed a standard
27, M G Road,
Bangalore - 560 001. deduction of a sum equal to 30% of the net annual
value.
Tel: +91 - 80 - 6546
2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
• ii) Interest on borrowed capital:- Where the property
has been acquired, constructed, repaired, renewed or
reconstructed with borrowed capital, the amount of
any interest payable on such capital is allowed as a
deduction. The amount of interest payable yearly
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should be calculated separately and claimed as a
info@altacit.com deduction every year. It is immaterial whether the
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www.altacit.com year
 How to compute your income from
house property?
CHENNAI
3rd Floor, ‘Creative Enclave’,

148-150, Luz Church Road,

Mylapore,
• Income from house property contains the
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821

BANGALORE
income generated by the owned property of an
Suit.e 920, Level 9,
Raheja Towers, 26- individual.
27, M G Road,

• Let’s assume you have a property and are

Bangalore - 560 001.
Tel: +91 - 80 - 6546
2400

charging Rs. 15,000 per month as rent. Let’s

COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,

also assume that you have paid Rs. 10,000 in

Coimbatore - 641018.
Tel: +91 - 422 – 6552921

municipal taxes for that year, and have Rs.

50,000 as interest on borrowed capital.

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 CHENNAI
3rd Floor, ‘Creative Enclave’, Income of House Property Amounts (in Rs.)
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
Total annual rental income value 15,000 x 12 = 1,80,000
BANGALORE
Suite 920, Level 9,
Raheja Towers, 26- Less: Municipal Taxes
27, M G Road, 10,000
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 Net Annual Value (NAV)
1,70,000
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921 Deductions under Section 24

Standard deduction (30% of NAV)

1,70,000 – 51,000 = 1,19,000
Interest on borrowed capital (if
applicable)
50,000

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info@altacit.com Income from House Property
69,000
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 Determination of
CHENNAI
Annual Value
3rd Floor, ‘Creative Enclave’,

148-150, Luz Church Road,

Mylapore, What is Annual Value?
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
Income from house property is taxable on the basis of annual value.
BANGALORE
Suite 920, Level 9,
Raheja Towers, 26-
27, M G Road,
Even if the property is not let out, notional rent receivable is
Bangalore - 560 001.
Tel: +91 - 80 - 6546
2400
taxable as its annual value. As per Sec. 23(1)(a) the annual value of
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
any property shall be the sum for which the property might
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
reasonably be expected to be let out from year-to-year. In
determining the annual value there are four factors which are
normally taken into consideration. These are: i) Actual rent
received or receivable, ii) Municipal value, iii) Fair rent of the
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property, iv) Standard rent.
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 Computation of annual value
CHENNAI
of a property [Sec. 23(1)]
3rd Floor, ‘Creative Enclave’,

148-150, Luz Church Road, • As per the Act the annual value is the value after
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 deduction of Municipal taxes, if any, paid by the
BANGALORE
Suite 920, Level 9,
owner. But for the sake of convenience, the annual
Raheja Towers, 26-
27, M G Road, value may be determined in the following steps:
Bangalore - 560 001.
Tel: +91 - 80 - 6546
2400 • Step I: Determine the gross annual value.
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road, • Step II: From the gross annual value compared in
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
Step I, deduct Municipal tax actually paid by the
owner during the previous year.
• The balance shall be the net annual value which, as
per the Income-tax Act is the annual value.
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 CHENNAI
3rd Floor, ‘Creative Enclave’, • Example:- Mrs. X has let out one house property @ Rs. 62,000
148-150, Luz Church Road,
Mylapore,
p.m., Municipal Valuation Rs. 72,000 p.m., Fair Rent Rs. 90,000
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
p.m., Standard rent Rs. 1,00,000 p.m., Municipal Tax paid Rs.
BANGALORE
40,000.
• Computation of Income under the head House Property
Suite 920, Level 9,
Raheja Towers, 26-
27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 Particulars Rs. Rs.
2400
COIMBATORE Gross Annual Value 10,80,000
BB1, Park Avenue,
# 48, Race Course Road,
Working Note: Rs.
Coimbatore - 641018. a) Fair Rent (Rs.
Tel: +91 - 422 – 6552921 90,000 *12) 10,80,000

b) Municipal Value (Rs. 72,000 *12) 8,64,000

c) Higher of a) or b) 10,80,000
d) Standard Rent (Rs. 1,00,000 *12) 12,00,000

e) Expected Rent (Lower of c or d) 10,80,000

f) Rent received/receivable (Rs. 62,000 *12) 7,44,000

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info@altacit.com Gross Annual Value shall be higher of e) or f) 10,80,000
Less: Municipal Tax 40,000
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 Contd.
CHENNAI
3rd Floor, ‘Creative Enclave’,

148-150, Luz Church Road,

Mylapore,
Chennai - 600 004.
House Property- Let out for part of year and rest of the year
Tel: +91 - 44 - 2498 4821 occupied for own residence Where a house property is let out for
BANGALORE
Suite 920, Level 9,
part of the year and rest of the year occupied for own residence,
Raheja Towers, 26-
27, M G Road, its annual value shall be determined as per the provision of Sec.
Bangalore - 560 001.
Tel: +91 - 80 - 6546 23(1) relating to let out property. In this case the period of
2400
COIMBATORE occupation of property for own residence shall be irrelevant and
BB1, Park Avenue,
# 48, Race Course Road, the annual value of such house property shall be determined as if
Coimbatore - 641018.
Tel: +91 - 422 – 6552921 it is let out for part of the year. Hence, the expected rent as per
Sec. 23(1) (a) shall be taken for full year but the actual rent
received or receivable shall be taken only for the period it is let
out and the gross annual value shall be higher of these two.

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 CHENNAI
3rd Floor, ‘Creative Enclave’,

148-150, Luz Church Road,

• Example:- R has a house property in Delhi whose Municipal
Mylapore,
Chennai - 600 004. Value is Rs. 1,20,000 and the Fair Rental Value is Rs. 1,40,000.
Tel: +91 - 44 - 2498 4821
It was self occupied by R. From 1.4.2011 to 31.7.2011. W.e.f.
BANGALORE
Suite 920, Level 9, 1.8.2011 it was let out at Rs.10,000 p.m. Compute the annual
Raheja Towers, 26-
27, M G Road,
Bangalore - 560 001.
value of the house property for r assessment year 2012-13 if
Tel: +91 - 80 - 6546
2400
the Municipal taxes paid during the year were Rs.40,000.
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018. Particulars
Tel: +91 - 422 – 6552921
Rs.

The gross annual value shall be higher of the following two:

a) Expected rent (Municipal Value Rs. 1,20,000 or FR Rs. 1,40,000,

whichever is higher) 1,40,000

b) Actual rent received/receivable for let out period, i.e., Rs. 10,000*8 80000
EMAIL Gross Annual Value a) or b), whichever is higher) 1,40,000
info@altacit.com Less: Municipal Taxes 40,000
Net Annual Value 1,00,000
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 ThankYou
CHENNAI
3rd Floor, ‘Creative Enclave’,

148-150, Luz Church Road,

Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821

BANGALORE
Suite 920, Level 9,
Raheja Towers, 26-
27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400

COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921

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info@altacit.com
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