Income from House Property Calculation of taxable Income under the house property under Income Tax Act, 1961

1. Income from
House Property

2. There must
be a property
consisting of
any building
or land
appurtenant
thereto.
Assessee is
the owner
(including
deemed
owner) of that
property.
Such property is
not used for the
purpose of
taxable business
or profession
carried on by the
owner.
HOUSE
PROPERTY OWNER NOT USED IN
BUSINESS OR
PROFESSION
General Conditions

3. Types
House
Property
Self
Occupied
Let Out

4. Gross Annual Value
Under the head Income from House Property, tax is not charged on the rent
earned from house property but on the inherent earning capacity of the house
property. Such earning capacity is called Annual Value.
Actual Rent Receivable(ARR)
Any sum receivable as rent of the house property for the previous year is an
evidence for determining the earning capacity of the building. Such actual rent
receivable is to be computed on accrual basis.
While computing actual rent receivable, outstanding rent shall be considered
but advance rent received during the financial year is not to be considered.
Fair or Notional rent of the property
Fair or notional rent of a property means rent fetched by a similar property in
the same or similar locality.

5. Standard Rent
Standard rent is the maximum rent. A landlord cannot except to receive from a
tenant any amount more than standard rent.
CALCULATION OF GROSS ANNUAL VALUE
Actual Rent Receivable (a)
Fair Rent(b)
Higher of (a) and (b) [A]
Standard Rent [B]
Lower of [A] and [B]

6. MUNCIPAL TAX
• Tax levied by the municipality or local authority is deductible from Gross
Annual value.
• It should be actually paid during the year.
• It must be paid by Assessee.
• Unpaid municipal tax or municipal tax paid by tenant shall not be allowed as
deduction.
STANDARD DEDUCTION
30% of the net annual value is allowed as standard deduction in respect of all
expenditures. (other than Interest on borrowed capital).

7. Deductions u/s 24
Deductions
Let Out
Standard
Deduction
30% on NAV
Interest on
Borrowing Capital
Self Occupied
Interest on
Borrowing Capital
Upto Rs.2,00,000
p.a

8. LET OUT PROPERTY

9. SELF-OCCUPIED PROPERTY
COMPUTATION
.

10. Latest Amendment:
Self Occupied house
property : two houses can be
shown as self occupied

11. Housing Loan Interest Certificate