1. DISCOVER . LEARN . EMPOWER
UNIVERSITY INSTITUTE OF LEGAL STUDIES
SUBJECT : Principles of Taxation Laws
Topic: Income under the head of House Property
2. 2
COURSE OUTCOME
Co
Number
Title Level
Co 1 The students will be able to exhibit sophisticated
knowledge related to tax accounting rules and
regulations
Understanding
Co 2 The students will be able analyze and resolve tax
problems
Analyzing
Co 3 The students will be able to identify and define with the
rules of tax, penalty and prosecution in case of default
Understanding
Co 4 The students will be able to understand the concept of
direct and indirect taxes, agricultural income and
incomes exempted from taxes
Understanding
3. ESSENTIALS
(Section-22)
Income under
House Property
The property should
consist of building
or land appurtenant
thereto
The assessee should
be the owner of the
property
It should not be
used by the assessee
for his own business
or profession
3
4. Gross Annual
Value of the House
Property
Let Out House
Property (Section-
23(1))
Self Occupied
Residential House
Property (Section-
23(2))
4
5. GROSS ANNUAL VALUE OF LOHP
• Reasonable Expected Rent or Actual Rent received or receivable by
the assessee whichever is higher.
• Reasonable Expected Rent:
Municipal Value: It is the value as assessed by the local authority for
imposing municipal taxes
or
Fair Rent : Rent of the same or similar property in same or similar
locality
(whichever is higher)
5
6. • Actual Rent received or receivable by the assessee: It does not include
unrealized rent and rent for the vacant period.
• Unrealized Rent: Rent which could not be realized by the owner because
of some dispute with tenant.
• Rent for the vacant period means if the property remained vacant for some
time during the current previous year the rent of the vacnt period is to be
reduced from the annual rent.
• When the actual rent received or receivable by the assessee is less than
Reasonable Expected Rent:
a) Due to vacancy only- Gross annual value will be Actual rent received or
receivable by the assessee.
b) Partly due to vacancy and partly due to other factors- Gross Annual Value
shall be Reasonable expected Rent minus loss due to vacancy
c) Only due to other factors other than vacancy- Reasonable Expected Rent
6
7. GROSS ANNUAL VALUE OF SORHP
• Gross Annual Value will be nil
• Where:
Property is used by the assessee or his family throught the previous year
for his own residential purpose
Or
Such property could not be occupied by the assessee throughout the
previous year either due to employment or due to business or
profession, the assessee is residing at some other place and no other
benefit is being derived from such property.
7
8. • A vacant property can be treated as Self-Occupied House Property
with Gross Annual Value as nil if the following conditions are
fulfilled:
a) The assessee owns a house property
b) The said property could not be occupied by the assessee throughout
the previous year either due to employment or due to business or
profession, the assessee is residing at some other place and no other
benefit is being derived from such property.
c) The said property is not let out for the whole or part of the previous
year
d) No other benefit is derived from such property.
• Only Individual or HUF can have the benefit of Section-23(2)
8
9. Deductions of
LOHP
Municipal Taxes
levied by local
authority and paid
by the assessee
Standard
Deduction-30% of
Net Annual Value
Interest on
borrowed capital
Interest of Pre-
Construction
Period
9
