1. INCOME FROM HOUSE
PROPERTY

2. Shankar Bose
Inspector of Income-tax
MSTU, Puri

3. Three Conditions:
(a) Property consists of any building or
land appurtenant thereto.
(b) Assesse owns the property
(c) Property not used by the owner for
business or profession

4. GROSS ANNUAL VALUE
LET OUT PROPERTY
1.Expected rent ( Municipal valuation / Fair rent )
2.Rent received / receivable > expected rent :
rent received / receivable.
3.If property remains vacant & rent received /
receivable < expected rent : rent received /
receivable

5. Exceptions
Self occupied property ( One house ) - Nil
House not actually occupied owing to
employment or business / profession at
other place - NIL

6. COMPUTATION OF INCOME
FROM HOUSE PROPERTY
Gross Annual Value
minus Municipal Tax = Net Annual Value
Net Annual Value
minus
Standard Deduction (30%) & interest
= Income / Loss from House Property
Note:- In the case of self occupied property only interest
on borrowed capital ( Maximum of Rs. 1,50,000/-)

7. PROPERTY OWNED BY CO-OWNERS
Shall be assessed as individual owner
when
Shares of the Co-owners :
definite & ascertainable

8. CAPITAL GAINS
Conditions :
1.Transfer
2.Capital Asset
3.Transfer during previous year
4.Profit or Gain arises on Transfer
5.Profit / Gains not exempted u/s 54 to 54 G

9. Capital Asset means
Properties of any kind
Excluding :
1. Personal effect.
2. Agricultural Land
3. Gold Bonds
4. Special Bearer Bonds.
5. Gold deposit bond
6. Any stock in trade , raw material held for
business or profession.

10. Types of
Capital Gains
Long term Short term
Capital Gains Capital Gains

11. Calculation of Capital Gain
(Short term)
Full Value of consideration
Minus
Expenses
Minus
Cost of acquisition & improvement
Minus
Exemption u/s 54B/54D/54G, if applicable
= Short term Capital Gain

12. Calculation of Long term Capital Gain
Full value of consideration
Minus
Expenses
Minus
Indexed cost of acquisition & improvement
Minus
Exemption u/s
54/54B/54D/54EC/54ED/54F/54G,
= Long term Capital Gain

13. Indexed cost of acquisition =
Cost of acquisition
X Cost inflation index
Cost inflation index for the year in which
for the year in the asset is
which the asset transferred
was acquired

14. Indexed cost of improvement =
Cost of improvement
X Cost inflation index
Cost inflation index for the year in which
for the year in the asset is
which the asset transferred
was improved

15. Exemptions :
Section Asset Transferred Type of Gain
1 54 Residential House Long Term
Property
2 54B Agricultural Land Short /Long
Term
3 54D Land or building Short /Long
forming part of Term
Industrial undertaking
4 54EC Long Term Capital Long Term
Asset

16. Exemption (cont’d)
Section Asset Transferred Type of Gain
5 54ED Units, Shares/ Long Term
securities
6 54F Long Term Capital Long Term
gain other than
residential house
7 54G Land building etc. in Short /Long
order to shift Term
industrial
Undertaking

17. Exemption in respect of transfer of
residential house (Section-54)
Conditions:-
1.Individual or HUF
2.Residential House Property
3.Long term Capital Asset
4.Purchase a residential house (one year
before or 2 years after) or construct
within 3 years.

18. Amount of exemption :
• Value of New House >or = Capital Gain
- FULL
• Value of New House < Capital Gain
- Value of New House

19. Consequences
New house property Capital Gain, if any
transferred within
3 years from plus
date of Purchase/
construction exemption granted
Short term Capital
Gain

20. Scheme of Deposit :-
Deposit Capital Gain in Capital
gain account
= deemed utilised for purchase
of new house.

21. Exemption in respect of transfer of asset
other than House Property (54F)
Conditions :-
1.Individual or HUF
2. Long term Capital asset other than
residential house
3.Purchase a residential house (one year
before or 2 years after) or construct
within 3 years.
4.Should not own > one residential
house other than new house

22. Amount of exemption :
• Cost of new house > or = net
consideration
= Full
• Cost of new house < net consideration
= Investment X Capital Gain
Net Consideration

23. Scheme of Deposit
Amount deposited ( Capital Gain Account)
= deemed utilised for new house
Not fully utilised within 3 years :-
Proportionate amount = Long Term Capital
Gain
Unutilised deposit X Original Capital Gain
Net Consideration

24. Consequences
Default Consequence
1 Transfer new house 1. Short term Capital
within 3 years Gain (new house)
2. Exemption allowed
shall be long term
Capital Gain
2 Purchase another Exemption allowed
house within 2 years = Long Term capital gain
Or
Constructs another
house within 3 years

25. Capital gain – How charged to Tax
Short Term capital Gain Taxed like any other
other than sale of securities income
Short term Capital gain 10% + Surcharge and
sale of securities education cess
Long Term Capital Gain 20% + Surcharge
(Total income minus Long Term Capital Gain) <
Taxable limit, Long term Capital Gain to be reduced
to that extent. Applicable also for :- Short Term
Capital Gain on transfer of Securities.