Income from House

property





Basis of charge is Sec 22
Income is taxable under the head Income from
House property if the following three conditions are
satisfied:
a. Property should consist of any buildings or lands
appurtenant thereto.

b. Assessee should be owner of the property.

c. 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
income tax





Building includes
residential houses ( let out or self occupied )
building let out for office use, storage,factory,etc

Appurtenant lands in respect of a building may be in
the form of compounds, backyards, car parking,etc

Owner includes a legal owner as well as deemed
owner. Owner may be an individual, HUF, firm,
company, society or AoP

Annual value of the property is assessed to tax u/s
22 in the hands of the owner even if he is not in
receipt of income.





Basis of computing income from a let out house property

Gross Annual Value - XXXXXX
Less : Municipal taxes - xxxxxx
Net Annual value - xxxxxx
Less : Deduction u/s 24
1. Standard Deduction - xxxxx
2. Interest on borrowed capital - xxxxxx
Income from House property - xxxxx

GROSS ANNUAL
VALUE
EXPECTED RENT(not
more than the standard
rent)
ACTUAL RENT
FAIR VALUE
MUNCIPAL VALUE
Higher value
Higher value





Deduct Municipal taxes

1. From the Gross Annual Value computed, deduct
municipal taxes(incl. Service taxes) levied by any local
authority in respect of the house property.

2. Municipal taxes are deductible only if
a) these taxes are borne by the owner and
b) these are actually paid by the owner during the
previous year

For the purpose of computation of net annual value,
properties can be classified into three categories :
(A) Properties let out throughout the year.
(B) Properties occupied by the owner for residential
purposes or properties not self-occupied owing to
employment at any other place.
(C) Partly let out and partly self occupied property.





Deduction u/s 24

1. Standard Deduction
30 % of net annual value is deductible irrespective of
any expenditure incurred by the tax payer.

2. Interest on borrowed capital is allowable as deduction,
if capital is borrowed for the purpose of purchase,
construction, repair, renewal or reconstruction of the
property.

3. Interest on borrowed capital is deductible fully without
any maximum ceiling( in the case of a let out property)





Interest on borrowed capital( self occupied property)

1. If the capital is borrowed on or after April 1,1999 for
acquiring or constructing a property, interest on
borrowed capital is deductible upto Rs. 1.5 Lakhs

2. If the capital is borrowed on or before April 1,1999,
interest on borrowed capital is deductible upto
Rs.30,000.

3. If the capital is borrowed on or after April 1, 1999 for
reconstruction, repairs , interest on borrowed capital is
deductible upto Rs.30,000



Exemptions
Income from house property situated in the
immediate vicinity of or on the agricultural land
and used as a dwelling house, store-house or
other out-house by the cultivator or receiver or
rent-in-kind.
Income from property held under trust for
charitable or religious purposes
Income from property occupied by the owner for
the purposes of his business or profession
carried on by him and the profits of which are
chargeable to Income tax. If the profits of
business or profession are not chargeable to tax
because the income of that business or
profession is exempt from tax, the income from
the house property shall be chargeable under
this head
Income from residential house where the house
consists of one residential house only and it could
not be occupied by the owner on account of his
employment, business or profession carried on at
any other place and he lives at such place in a
house which does not belong to him. The income
shall be exempt provided:
(a) The house was not occupied by the owner during
the whole of the previous year; or
(b) The house was not let; or
(c) No other benefit was derived by the owner
Income from house property belonging to a
Registered Trade Union
Income of an authority constituted under any law for
the time being in force for the marketing of
commodities; any income derived from the letting of
go downs or warehouses for storage, processing or
facilitating the marketing of commodities
The annual value of any one palace in the
occupation of an ex-ruler
Income from house property belonging to a local
authority
Income from property of an authority constituted for
the purpose of planning, development, or
improvement of cities, towns and villages
Income from property of the approved scientific
research association subject to fulfillment of certain
conditions
Income from property of a games association
Income from property in the case of a person
resident of Ladakh.
Income from property of a political party


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