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- Income from House Property
Income from House Property
INCOME FROM HOUSE PROPERTY
Problem 1
Computation of income from house property of Mr. Nehra for the A.Y. 2011-12
Particulars |
Details |
Amount |
Gross Annual Value (Working) |
100000 |
|
Less : Municipal Tax (Rs.4200 * 2) |
8400 |
|
Net Annual Value (NAV) |
91600 |
|
Less : Deduction u/s |
||
24(a) Standard Deduction (30% of NAV) |
27480 |
|
24(b) Interest on loan |
Nil |
27480 |
Income from house property |
64120 |
Working: Computation of Gross Annual Value
Step |
Particulars |
Explanation |
Amount |
1 |
Reasonable Expected Rent (RER) |
Fair Rent |
100000 |
2 |
Actual Rent Received (ARR) |
7500 * 12 |
90000 |
3 |
Gross Annual Value (GAV) |
Higher of above |
100000 |
Problem 2
Computation of income from house property of Sidhu for the A.Y. 2011-12
Particulars |
Details |
Amount |
Let out house [Sec. 23(1)] |
||
Gross Annual Value |
90000 |
|
Less : Municipal Tax (Rs.30000 + Rs.70000) |
100000 |
|
Net Annual Value (NAV) |
(10000) |
|
Less : Deduction u/s |
||
24(a) Standard Deduction (30% of NAV) |
Nil 1 |
|
24(b) Interest on loan for construction |
25000 |
(25000) |
Income from house property |
(35000) |
Notes
- Where NAV is negative, standard deduction u/s 24(a) shall not be allowed
- Any other expenses such as ground rent, etc. are not to be deducted from assessment year 2002-03.
Problem 3
Computation of income from house property of Raja for the Assessment Year 2011-12
Particulars |
Amount |
Amount |
Let out house |
||
Gross Annual Value (Working) |
36000 |
|
Less : Municipal Tax # (50%of Rs.6000) |
3000 |
|
Net Annual Value (NAV) |
33000 |
|
Less : Deduction u/s |
||
24(a) Standard Deduction (30% of NAV) |
9900 |
|
24(b) Interest on loan for construction |
20000 |
29900 |
Income from house property |
3100 |
# Municipal tax actually paid is allowed as deduction
Working: Computation of Gross Annual Value
Step |
Particulars |
Explanation |
Amount |
1 |
Reasonable Expected Rent (RER) |
Fair rent 1 (Rs.3000 * 12) |
36000 |
2 |
Actual Rent Received (ARR) |
Rs.3000 * 9 |
27000 |
3 |
Gross Annual Value (GAV) |
Higher of RER and ARR |
36000 |
Problem 4
Computation of income from house property for the A.Y. 2011-12
Particulars |
Amount |
Amount |
Let out house |
||
Gross Annual Value (Working) |
42000 |
|
Less : Municipal Tax [being 80% of (10% of municipal value)] |
3200 |
|
Net Annual Value (NAV) |
38800 |
|
Less : Deduction u/s |
||
24(a) Standard Deduction (30% of NAV) |
11640 |
|
24(b) Interest on loan for construction |
20000 |
31640 |
Income from house property |
7160 |
- Actual municipal tax paid by the assessee is allowed as deduction
- Any other expenses such as Ground Rent, etc. are not to be deducted from assessment year 2002-03.
Working: Computation of Gross Annual Value
Step |
Particulars |
Explanation |
Amount |
Municipal Value (MV) |
40000 |
||
Fair Rent (FR) |
3500 * 12 |
42000 |
|
1 |
Reasonable Expected Rent (RER) |
Higher of MV or FR |
42000 |
2 |
Actual Rent Received (ARR) |
3500 * 9 |
31500 |
3 |
Gross Annual Value (GAV) |
Higher of RER and ARR |
42000 |
Problem 5
Since Raju uses the house for his residential purposes and lets out half of the house for 3 months, hence the house shall be treated as partly self-occupied and partly let-out and data evaluated as under.
Particulars |
Total |
Unit 1 (Self-occupied) |
Unit 2 (let-out) |
Municipal value |
80000 |
40000 |
40000 |
Fair rent |
36000 |
- |
36000 |
Actual Rent Receivable |
3000 * 3 |
- |
9000 |
Municipal Tax |
18000 |
9000 |
9000 |
Computation of Net Annual Value (NAV)
Steps |
Particulars |
Working |
Unit 1 (Self-occupied) |
Unit 2 (Let out) |
Municipal value |
(1:1) |
40000 |
40000 |
|
Fair rent |
3000 * 12 |
- |
36000 |
|
1 |
Reasonable Expected Rent |
Higher of above |
- |
40000 |
2 |
Actual Rent Receivable |
3000 * 3 |
- |
9000 |
3 |
Gross Annual Value |
Higher of Step 1 & 2 |
Nil |
40000 |
Less : Municipal Tax |
Nil |
9000 |
||
Net Annual Value (NAV) |
Nil |
31000 |
||
Problem 6
Computation of income from house property of Mr. Mana for the Assessment Year 2011-12
Particulars |
Amount |
Amount |
Unrealized rent u/s 25A |
20000 # |
|
Arrears of rent u/s 25B |
30000 |
|
Less : Standard Deduction (30% of receipt) |
9000 |
21000 |
Income from house property |
41000 |
|
# It is assumed that unrealized rent relates to previous year 2000-01 or earlier.
Problem 7
Computation of income from house property of Mrs. Somya for the Assessment Year 2011-12
Particulars |
Amount |
Amount |
Let Out u/s 23(1) |
||
Gross Annual Value |
120000 |
|
Less : Municipal Tax |
Nil |
|
Net Annual Value (NAV) |
120000 |
|
Less : Deduction u/s |
||
24(a) Standard Deduction (30% of NAV) |
36000 |
84000 |
Unrealized rent u/s 25A 1 |
20000 |
|
Arrears of rent u/s 25B |
30000 |
|
Less : Standard Deduction (30% of amount received) |
9000 |
21000 |
Income from house property |
125000 |
Problem 8
Computation of income from house property of James for the A.Y. 2011-12
Particulars |
Details |
Amount |
Let Out [23(1)] |
||
Gross Annual Value (Working 1) |
276000 |
|
Less : Municipal Tax [50% (20% of Rs.200000)] |
20000 |
|
Net Annual Value (NAV) |
256000 |
|
Less : Deduction u/s |
||
24(a) Standard Deduction (30% of NAV) |
76800 |
|
24(b) Interest on Loan (Working 2) |
138000 |
214800 |
Income from house property |
41200 |
|
Working 1: Computation of Gross Annual Value
Step |
Particulars |
Explanation |
Amount |
Gross Municipal Value (GMV) |
200000/90% |
222222 |
|
Fair Rent (FR) |
252000 |
||
Standard Rent |
240000 |
||
1 |
Reasonable Expected Rent (RER) |
Higher of MV or FR 1 |
240000 |
2 |
Actual Rent Receivable (ARR) |
Rs.23000 * 12 |
276000 |
3 |
Gross Annual Value (GAV) |
Higher of above |
276000 |
1 RER cannot exceed standard rent |
|||
Working 2: Computation of interest on loan allowed u/s 24(b)
Interest for post-construction period Rs.120000 (i.e. Rs.1000000 * 12%)
Pre-construction period: From 1/7/08 to 31/3/09 = 9 months.
Total interest for pre-construction period: Rs.1000000 * 9/12 * 12% = Rs.90000
Interest allowed on account of pre-construction period = Rs.90000 * 1/5 = Rs.18000
Total interest allowed u/s 24(b) = Rs.120000 + Rs.18000 = Rs.138000
Note : Any other expenses such as repairs, insurance premium, etc. are not allowed as deduction from A.Y. 2002-03.
Problem 9
In the given case, there are two options:
- Option 1: Take 1 st House as Self-occupied (S/O) and 2 nd as Deemed to be let out (DLO)
- Option 2: Take 1 st House as Deemed to be let out (DLO) and 2 nd as Self-occupied (S/O)
Income under the head Income from house property shall be computed by applying each option separately and then choose the option, which yields least income under this head; as shown below -
Particulars
|
Option 1 |
Option 2 |
||
House 1 |
House 2 |
House 1 |
House 2 |
|
S/O |
DLO |
DLO |
S/O |
|
GAV (lower of MV or FR subject to maximum of SR) |
Nil |
20400 |
9000 |
Nil |
Less : Municipal Tax |
Nil |
2400 |
1800 |
Nil |
Net Annual Value (A) |
Nil |
18000 |
7200 |
Nil |
Less : Deduction u/s |
||||
24(a) Standard deduction (30% of NAV) |
Nil |
5400 |
2160 |
Nil |
24(b) Interest on loan (Maximum * ) |
3000 |
36000 |
3000 |
30000 * |
Total deduction (B) |
3000 |
41400 |
5160 |
30000 |
Income from house property [(A) (B)] |
(-) 3000 |
(-) 23400 |
2040 |
(-) 30000 |
Income from house property |
(-) 26400 |
(-) 27960 |
||
Income under the head 'Income from house property' under option 1 is (-) Rs.26400 and in option 2 is (-) Rs.27960. Hence, option 2 is better. |
||||
Total income of X is (-) Rs.27960 [as dividend is exempt from tax u/s 10(34)].
Problem 10
Computation of taxable income of Kiran for the Assessment Year 2011-12
Particulars |
Details |
Amount |
Amount |
Income from house property |
|||
House No. 1: Partly let-out & partly selfoccupied [Sec. 23(3)] |
|||
Gross Annual Value (Working) |
27000 |
||
Less : Municipal Tax |
4000 |
||
Net Annual Value (NAV) |
23000 |
||
Less : Deduction u/s |
|||
24(a) Standard Deduction (30% of NAV) |
6900 |
||
24(b) Interest on Loan (Rs.21600 + Rs.12960) |
34560 |
41460 |
(18460) |
Profits and gains of business or profession |
|||
Share of profit from partnership firm [Exempt u/s 10(2A)] |
Nil |
||
Salary from firm |
25000 |
||
Interest on capital |
20000 |
45000 |
|
Gross Total Income/Total Income |
26540 |
Working
Computation of Gross Annual Value
Step |
Particulars |
Explanation |
Amount |
Municipal Value (MV) |
24000/90% |
26667 |
|
Fair Rent (FR) |
27000 |
||
1 |
Reasonable Expected Rent (RER) |
Higher of MV or FR |
27000 |
2 |
Actual Rent Receivable (ARR) |
2100 * 5 |
10500 |
3 |
Gross Annual Value (GAV) |
Higher of above |
27000 |
Notes : Any other expenses such as insurance premium, etc. are not to be deducted from the A.Y.2002-03.
Problem 11
Computation of income from house property for the A.Y. 2011-12
Particulars |
Details |
Amount |
Amount |
House 1: Self occupied [23(2)(a)] |
|||
Net Annual Value (NAV) |
Nil |
||
Less : Deduction u/s |
|||
24(b) Interest on Loan |
17000 |
(17000) |
|
House 2: Let out [23(1)] |
|||
Gross Annual Value (Working) |
120000 |
||
Less : Municipal Tax (16% of Rs.120000) |
19200 |
||
Net Annual Value (NAV) |
100800 |
||
Less : Deduction u/s |
|||
24(a) Standard Deduction (30% of NAV) |
30240 |
||
24(b) Interest on Loan |
25000 |
55240 |
45560 |
Income from house property |
28560 |
Working: Computation of Gross Annual Value
Step |
Particulars |
Explanation |
House 2 |
Municipal Value (MV) |
120000 |
||
Fair Rent (FR) |
90000 |
||
Standard Rent |
126000 |
||
1 |
Reasonable Expected Rent (RER) |
Higher of MV or FR 1 |
120000 |
2 |
Actual Rent Received (i.e. ARR Unrealised rent) * |
110000 |
|
3 |
Gross Annual Value (GAV) |
Higher of above |
120000 |
* Since rent received is given, hence unrealized rent of current year need not to be separately adjusted. |
|||
1 RER cannot exceed standard rent
Note : Any other expenses such as ground rent, etc. are not allowed as deduction from A.Y. 2002-03.
Problem 12
In the given case, there are two options:
- Option 1: Take 1 st Flat as Self-occupied (S/O) and 2 nd as Deemed to be let out (DLO)
- Option 2: Take 1 st Flat as Deemed to be let out (DLO) and 2 nd as Self-occupied (S/O)
Total income under the head Income from house property shall be computed by applying each option separately and then choose the option, which yields least income under this head; as shown below -
Particulars |
Option 1 |
Option 2 |
||
Flat 1 |
Flat 2 |
Flat 1 |
Flat 2 |
|
S/O |
DLO |
DLO |
S/O |
|
Gross Annual Value |
Nil |
45000 |
80000 |
Nil |
Less : Municipal Tax (10 % of Municipal value) |
Nil |
4500 |
9000 |
Nil |
Net Annual Value (A) |
Nil |
40500 |
71000 |
Nil |
Less : Deduction u/s |
||||
24(a) Standard deduction (30% of NAV) |
Nil |
12150 |
21300 |
Nil |
24(b) Interest on loan (Note 1) |
30000 |
Nil |
40000 |
Nil |
Total deduction (B) |
30000 |
12150 |
61300 |
Nil |
Income from house property [(A) (B)] |
(-) 30000 |
28350 |
9700 |
Nil |
Total Income from house property |
(-) 1650 |
9700 |
||
Total income under the head income from house property under option 1 is (-) Rs.1650 and in option 2 is Rs.9700. Hence, option 1 is better. |
||||
Notes
- Interest is allowed to the maximum of Rs.30000 (assumed loan taken before 1.4.99).
- No treatment shall be made for the vacancy period as the property is not let out.
Problem 13
Arrears rent though decided in the financial year 2009-10 but the same is received in the financial year 2010-11. Sec. 25B provides for taxing arrear rent on cash basis. Hence, the tax liability arises in the A.Y. 2011-12.
Such rent is taxable in the year of receipt (i.e., A.Y. 2011-12) as under:
Particulars |
Amount |
Arrears rent received |
10000 |
Less : Standard deduction u/s 24(a) equal to 30% of such rent |
3000 |
Income from house property u/s 25B |
7000 |
Problem 14
Computation of income from house property of Radheshyam and Ghanshyam for the A.Y. 2011-12
Particulars |
Radheshyam |
Ghanshyam |
Net annual Value |
Nil |
Nil |
Less : Interest on loan (Note) |
30000 |
24000 |
Income from house property |
(-) 30000 |
(-) 24000 |
Note: Interest on loan divided as under:
Particulars |
Working |
Share of int. |
Maximum limit |
Allowed interest |
In case of Radheshyam |
60000 * 60% |
36000 |
30000 |
30000 |
In case of Ghanshyam |
60000 * 40% |
24000 |
24000 |
24000 |
