The document discusses income from house property under the Indian Income Tax Act. It provides information on determining the annual rental value and net annual value of let out and self-occupied properties. It includes definitions of key terms like municipal rental value, fair rental value and standard rent. It also discusses the treatment of different scenarios such as vacancy losses, partial letting, subletting income and interest on housing loans. Several numerical examples are provided to illustrate the calculation of annual rental value, gross annual value, standard deduction and net income from house property.

1. INCOME FROM HOUSE PROPERTY
Dr. NGPASC
COIMBATORE | INDIA
Dr. N.G.P. ARTS AND SCIENCE COLLEGE
(An Autonomous Institution, Affiliated to Bharathiar University, Coimbatore)
Approved by Government of Tamil Nadu and Accredited by NAAC with 'A' Grade (2nd Cycle)
Dr. N.G.P.- Kalapatti Road, Coimbatore-641048, Tamil Nadu, India
Web: www.drngpasc.ac.in | Email: info@drngpasc.ac.in | Phone: +91-422-2369100

2. Dr. NGPASC
COIMBATORE | INDIA
House Property
Residential Houses,
Bungalows,
warehouses,
building, godowns
etc
Assessee
should be
owner of the
property
Annual
Value
Not for
business or
profession

3. Dr. NGPASC
COIMBATORE | INDIA
House Property
Not treated
as house
property
income
Guest
accommodation
Composite
letting
Sub-letting
income
Letting out –
Business or
profession

4. Dr. NGPASC
COIMBATORE | INDIA
Exempted from House Property
Agriculture HP
Stock in trade
Registered trade union
Charitable Purposes
Self Occupied but vacant
Own business or profession
Local authority, Scientific
RI, Political party,
university and hospital

5. Dr. NGPASC
COIMBATORE | INDIA
Different types of rental values
Rental
Actual
Rent
Real Rental
Value
Municipal
Rental
Value(MRV)
Fair Rental
Value
(FRV)
Standard
Rent
Expected
Rental
Value(ERV)

6. Dr. NGPASC
COIMBATORE | INDIA
Annual value of Self-Occupied HP
More than one Owned House
One Owned House
Independent Units
Partly let-out partly self occupied
Own Business or Profession

7. Dr. NGPASC
COIMBATORE | INDIA
Determination of Annual Value
Let out House
property
Self-occupied
House Property

8. Dr. NGPASC
COIMBATORE | INDIA
Annual Value of Let out House Property
MRV xxx
FRV xxx
Whichever is Higher xxx
Standard Rent xxx
Whichever is less – ERV xxx
Actual Rent xxx
Whichever is Higher – ARV XXXX

9. Dr. NGPASC
COIMBATORE | INDIA
Vacancy and Unrealized rent
MRV xxx
FRV xxx
Whichever is Higher xxx
Standard Rent xxx
Whichever is less – ERV xxx
Actual Rent – Unrealized rent xxx
Whichever is Higher – ARV XXXX
Less: Vacancy xxx
Annual Rental Value xxxx

10. Income from House Property (Let out)
Particulars ₹ ₹ ₹
Gross Annual Value Xxxx
Less: Municipal Taxes Xxx
Net Annual Value (NAV) Xxxx
Less:
Standard Deductions u/s 24(a) at 30%
of NAV
Xxx
Interest on Borrowed capital u/s 24(b) Xxx Xxx
Income from house property xxx
Dr. NGPASC
COIMBATORE | INDIA

11. Interest on Housing Loan (Let out)
Particulars ₹
Let out/ deemed let out house - No Limit
Purpose: Purchase / Construction/ Repair
xxxx
Dr. NGPASC
COIMBATORE | INDIA

12. Income from House Property (Self occupied House)
Particulars ₹ ₹ ₹
Net Annual Value (NAV) NIL
Less:
Interest on Borrowed capital/
Interest on housing loan u/s 24(b)
xxxx
Income from house property xxxx
Dr. NGPASC
COIMBATORE | INDIA

13. Dr. NGPASC
COIMBATORE | INDIA
Interest on Housing Loan
Self Occupied House
Loan taken before 1.4.1999
Purpose: Purchase/Construction/Repairs
Max. Limit: 30000
Loan taken on or after 1.4.1999
Purpose: Purchase/Construction
Max. Limit: 2,00,000 p.a.
Conditions: Completion within 5 years
Purpose: Repairs
Max. Limit: 30,000 p.a.

14. Dr. NGPASC
COIMBATORE | INDIA
Determination of ERV
Example 1
Case A:
MRV- 30000; FRV -36000 & SR – Nil; Find out ERV
Case B:
MRV- 30000; FRV -36000 & SR – 33000; Find out ERV
Case C:
MRV- 30000; FRV -36000 & SR – 42000; Find out ERV

15. Dr. NGPASC
COIMBATORE | INDIA
Determination of ERV
Case A:
MRV -30000
FRV -36000
w.e is higher – 36,000
SR - NIL
w.e is less – ERV – 36000

16. Dr. NGPASC
COIMBATORE | INDIA
Determination of ERV
Case B:
MRV -30000
FRV -36000
w.e is higher – 36,000
SR - 33000
w.e is less – ERV – 33000

17. Dr. NGPASC
COIMBATORE | INDIA
Determination of ERV
Case C:
MRV -30000
FRV -36000
w.e is higher – 36,000
SR - 42000
w.e is less – ERV – 36000

18. Dr. NGPASC
COIMBATORE | INDIA
Determination of Annual Value
Example 2
Calculate ARV from the particulars given below
MRV- 60000 p.a. FRV -66000 p.a.
A. If Actual Rent is 72,000 p.a. and Standard
Rent is 69000 p.a.
B. If Actual Rent is 63,000 p.a. and Standard
Rent is 69000 p.a.

19. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
A. If Actual rent is 72000
MRV -60000
FRV -66000
w.e is higher – 66,000
SR - 69000
w.e is less – ERV – 66000
Actual Rent – 72000
w.e. is higher ARV -72000

20. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
B. If Actual rent is 63000
MRV -60000
FRV -66000
w.e is higher – 66,000
SR - 69000
w.e is less – ERV – 66000
Actual Rent – 63000
w.e. is higher ARV -66000

21. Dr. NGPASC
COIMBATORE | INDIA
Determination of Gross Annual Value
Example 3
Calculate Gross Annual Value from the particulars given below
It is assumed that both the houses were let out throughout the
year and there was also no unrealized rent.
House A House B
MRV 80000 80000
FRV 100000 100000
Standard Rent 70000 120000
Actual Rent 120000 90000

22. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
House A House B
MRV 80000 80000
FRV 100000 100000
w.e is higher 100000 100000
Standard Rent 70000 120000
w.e is less is ERV 70000 100000
Actual Rent 120000 90000
w.e. is higher is Gross Annual
Value
120000 100000

23. Dr. NGPASC
COIMBATORE | INDIA
Determination of Annual Value
Example 4
Calculate ARV from the particulars given below
MRV- 60000 p.a. FRV -66000 p.a
Actual Rent is 72,000 p.a.
Standard Rent is 69000 p.a.
Unrealized Rent – 6000

24. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
MRV -60000
FRV -66000
w.e is higher – 66,000
SR - 69000
w.e is less – ERV – 66000
Actual Rent – unrealized rent (72000-6000) 66000
w.e. is higher ARV - 66000

25. Dr. NGPASC
COIMBATORE | INDIA
Determination of Annual Value
Example 5
Calculate ARV from the particulars given below
MRV- 60000 p.a. FRV -66000 p.a
Actual Rent is 72,000 p.a.
Standard Rent is 69000 p.a.
Vacancy – 6000

26. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
MRV -60000
FRV -66000
w.e is higher – 66,000
SR - 69000
w.e is less – ERV – 66000
Actual Rent – 72000
w.e. is higher ARV - 72000
less: Vacancy 6000
ARV 66000

27. Dr. NGPASC
COIMBATORE | INDIA
Determination of Annual Value
Example 6
Calculate ARV from the particulars given below
MRV- 60000 p.a. FRV -66000 p.a
Actual Rent is 72,000 p.a.
Standard Rent is 69000 p.a.
Unrealized Rent - 12000
Vacancy – 6000

28. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
MRV -60000
FRV -66000
w.e is higher – 66,000
SR - 69000
w.e is less – ERV – 66000
Actual Rent –Unrealized Rent (72000-12000) 60000
w.e. is higher ARV - 66000
less: Vacancy 6000
ARV 60000

29. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
Example 7
Calculate ARV from the particulars given below
MRV- 60000 p.a. FRV -66000 p.a
Actual Rent is 7000 p.m. Standard Rent is 69000 p.a.
Assesse could not realize rent for two months and
house also remained vacant for 2 months during the
previous year 2019-2020.

30. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
Particulars ₹ ₹
MRV 60000
FRV 66000
w.e is higher 66000
Standard Rent 69000
w.e is less is ERV 66000
Actual Rent (7000*12=84000) (84000 -14000) 70000
w.e. is higher 70000
(-) Vacancy (7000*2) 14000
Annual Rental Value 56000

31. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
Example 8
Calculate ARV from the particulars given below
MRV- 84000 p.a. FRV -90000 p.a
Standard Rent is 87000 p.a. Real Rent is 8000 p.m.
Unrealized Rent - 4000
Date of completion – 31.7.2019
Date of letting – 1.10.2019

32. Dr. NGPASC
COIMBATORE | INDIA
Determination of ARV
Particulars ₹ ₹
MRV (84000*8/12) 56000
FRV (90000*8/12) 60000
w.e is higher 60000
Standard Rent (87000*8/12) 58000
w.e is less is ERV 58000
Actual Rent (8000*8=64000) (64000 -4000) 60000
w.e. is higher ARV 60000
(-) Vacancy (8000*2) 16000
Annual Rental Value 44000

33. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Sub-letting Income
Example 9
Mr. Rama Rao had taken a shop on rent at monthly rent of ₹
2000. He has sub-let 25% of the area to Mr. D.K. Rai @ ₹ 1000
p.m. He incurred ₹ 4000 on repairs of the shop. Calculate his
income from sub-letting.

34. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Sub-letting Income
Particulars ₹ ₹
Rent Received @₹ 1000 pm 12000
Less: Actual Expenses relating to
sub-let portion
Rent paid (25% of ₹ 24000) 6000
Repairs (25% of ₹ 4000) 1000 7000
Income from sub-letting 5000

35. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Sub-letting Income
Example 10
Mr. Sudhakar Rao hired a house of 5 rooms at ₹ 5000 p.m. He
paid ₹6000 as municipal taxes and spent ₹5000 on the repair of
the house. He has sub-let 2 rooms at the rate of ₹ 3000 p.m. to
his friend Mr. Prabhakar Rao. Compute income from sub-letting.

36. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Sub-letting Income
Particulars ₹ ₹
Rent Received (3000*12) 36000
Less: Actual Expenses relating to sub-let portion
Rent paid (60000*2/5) 24000
Repairs (5000*2/5) 2000
Municipal taxes (6000*2/5) 2400 28400
Income from sub-letting 7600

37. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Annual Rental Value
Example 11
Mr. X has constructed a multistory building at Delhi consisting of 40 flats.
Each flat is let out @1000 p.m. The municipal authorities have fixed the
rental value of this property as 4,50,000 p.a. The owner bears the following
expenses:
i) Lift maintenance – 12000 p.a.
ii) Pump maintenance – 8000 p.a.
iii) Salary of Gardener and watchman – 3600 p.a.
iv) Swimming pool expenses – 9000 p.a.
Compute the Annual Rental Value for the property.

38. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Annual Rental Value
Particulars ₹ ₹
Municipal rental value 450000
Actual Rent(40*1000*12) 480000
Less: Lift maintenance 12000
Pump maintenance 8000
Salary of gardener and watchman 3600
Swimming pool expenses 9000 32600
447400
Whichever is higher is ARV 450000

39. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Annual Rental Value
Example 12
Compute Annual rental value in following case:
i) MRV - 48000 p.a.
ii) Actual Rent Received – 50000 p.a.
iii) Lift and pump maintenance charges paid by owner - 6000 p.a.
iv) Salary of common Gardener and watchman paid by tenants to the
owner 500 p.m. and actual expenses incurred by the owner during the
year are 4200.

40. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Annual Rental Value
Particulars ₹ ₹
Municipal rental value 48000
Actual rent 50000
Less: Lift and pump maintenance 6000 44000
Whichever is higher is ARV 48000
Particulars ₹
Salary of gardener and watchman paid by tenant 500*12 6000
Less: Actual expenses incurred by the owner 4200
Income from other sources 1800
Calculation of Income from other sources

41. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Net Annual Value
Example 13
Compute Net Annual value in following case:
A) MRV (Date of Completion is 1.7.2018) 60000 p.a.
Actual Rent 72000 p.a.
Taxes levied by local authority and paid by owner
a) House tax 6000 p.a.
b) Sanitation cess 1000 p.a.
B) Date of completion 1.6.2019
Rent Received @ 4000 p.m. 40000
MRV 36000 p.a.
Municipal taxes are 10% of MRV
He paid 50% of taxes during the year 2019-2020

42. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Net Annual Value
Particulars ₹ ₹
Municipal rental value 60000
Actual rent 72000
Whichever is higher is ARV 72000
Less: Local Taxes:
House tax 6000
Sanitation cess 1000 7000
NET ANNUAL VALUE 65000
A) Date of Completion : 1.7.2018

43. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Net Annual Value
Particulars ₹ ₹
Municipal rental value (10 Months) 30000
Actual rent (10 Months) 40000
Whichever is higher is ARV 40000
Less: Municipal Taxes paid by owner (50%)
(36000*10/100 =3600) (50% of (3600*10/12))
1500
NET ANNUAL VALUE 38500
B) Date of Completion : 1.6.2019

44. 44