The document discusses the taxation of income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any building or land owned by the assessee. It outlines the essential conditions to be classified as income from house property and discusses various concepts like deemed ownership, tax exemptions, computation of gross annual value and deductions allowed. It provides examples to illustrate the calculation of income from house property in different scenarios.

1. INCOME FROM HOUSE
PROPERTY
DR. N.K.GUPTA

2. CHARGEABILITY
(SEC. 22)
THE ANNUAL VALUE OF PROPERTY
CONSISTING OF ANY BUILDING OR
LAND APPURTENANT THERETO OF
WHICH THE ASSESSEE IS THE OWNER ,
SHALL BE CHARGEABLE UNDER THE
HEAD ‘INCOME FROM HOUSE
PROPERTY’.

3. ESSENTIAL CONDITIONS
 THE PROPERTY MUST CONSIST OF
BUILDINGS AND LAND APPURTENANT
THERETO
 THE ASSESSEE MUST BE THE OWNER OF
THE PROPERTY
 THE PROPERTY MAY BE USED FOR ANY
PURPOSE OTHER THAN FOR HIS OWN
BUSINESS OR PROFESSION

4. OWNERSHIP (MEANING)
 THE ASSESSEE MUST BE HAVING THE
OWNERSHIP OF THE PROPERTY. THE
OWNERSHIP MUST BE BACKED BY
DOCUMENTARY EVIDENCES.
 HOWEVER, IT INCLUDES DEEMED
OWNERSHIP.

5. DEEMED OWNERSHIP (SEC. 27)
 TRANSFER TO SPOUSE
 TRANSFER TO MINOR CHILD EXCEPT
MINOR MARRIED DAUGHTER
 HOLDER OF AN IMPARTIBLE ESTATE
 MEMBER OF A CO-OPERATIVE SOCIETY
 RIGHT IN PROPERTY FOR AT LEAST 12
YEARS

6. CONTD.
 POSSESSION OF A HOUSE PROPERTY
UNDER SECTION 53A OF TRANSFER OF
PROPERTY ACT, 1882 MEANS THE SALE
DEED IS NOT REGISTERED IN THE
NAME OF THE ASSESSEE. HOWEVER,
THE SALE CONSIDERATION HAS BEEN
PAID. FOR EXAMPLE: POWER OF
ATTORNEY, ETC.

7. TAX FREE INCOME FROM HOUSE
PROPERTY
 INCOME FROM HOUSE PROPERTY IN
THE VICINITY OF AGRICULTURAL LAND
[SEC. 2(1A)(C)];
 INCOME FROM ONE PALACE IN THE
OCCUPATION OF A EX-RULER [SEC.
10(19A)]
 INCOME FROM HOUSE PROPERTY USED
FOR OWN BUSINESS OR PROFESSION

8. TAX EXEMPT INCOMES (CONTD.)
 INCOME FROM HOUSE PROPERTY
BELONGS TO:
a. A LOCAL AUTHORITY [SEC. 10(20)]
b. A SCIENTIFIC RESEARCH ASSOCIATION
[SEC. 10(21)]
c. A REGISTERED TRADE UNION [SEC. 10(24)]
d. A POLITICAL PARTY [SEC. 13A]
e. A CHARITABLE TRUST [SEC. 11(1)]

9. TAX EXEMPT INCOMES (CONTD.)
 ONE SELF OCCUPIED HOUSE PROPERTY
[SEC 23(2)(a)]
 INCOME FROM SELF OCCUPIED
PROPERTY WHICH COULD NOT BE
USED DURING THE PREVIOUS YEAR
[SEC. 23(2)(b)]

10. COMPUTATION OF INCOME FROM
HOUSE PROPERTY
GROSS ANNUAL VALUE
LESS: UNREALISED RENT
LESS: MUNICIPAL TAXES PAID
ANNUAL VALUE
LESS: STATUTORY DEDUCTION @ 30% OF
ANNUAL VALUE
LESS: INTEREST ON BORROWED MONEY FOR
THE PURPOSES OF HOUSE
PROPERTY__________
INCOME FROM HOUSE PROPERTY

11. DETERMINATION OF
ANNUALVALUE [SEC. 23(1)]
FIRSTFIRST CALCULATE GROSS ANNUAL VALUE
WHICH CAN BE CALCULATED AS FOLLOWS:
FAIR RENT OR MUNICIPAL VALUE
WHICHEVER IS HIGHER BUT SUBJECT TO
STANDARD RENT (RENT DECIDED BY RENT
CONTROL AUTHORITY) --------------------A
ACTUAL ANNUAL RENT --------------------B
GROSS ANNUAL VALUE WILL BEGROSS ANNUAL VALUE WILL BE A OR BA OR B
WHICH EVER IS HIGHERWHICH EVER IS HIGHER

12. COMPUTATION OF GROSS ANNUAL
VALUE IN DIFFERENT CASES
 LET OUT PROPERTY FOR THE FULLLET OUT PROPERTY FOR THE FULL
YEARYEAR
GROSS ANNUAL VALUE WILL BE
CALCULATED AS ABOVE
 LET OUT PROPERTY REMAINS VACANTLET OUT PROPERTY REMAINS VACANT
FOR A PART OF THE YEARFOR A PART OF THE YEAR
GROSS ANNUAL VALUE WILL BE
REDUCED BY ACTUAL RENT FOR THE
VACANCY PERIOD

13. CONTD.
 SELF OCCUPIED PROPERTY FOR THESELF OCCUPIED PROPERTY FOR THE
WHOLE YEARWHOLE YEAR
IN THIS CASE ANNUAL VALUE WILL BE
TAKEN AS NIL
 DEEMED LET OUT PROPERTYDEEMED LET OUT PROPERTY
IF MORE THAN ONE PROPERTY IS SELF-
OCCUPIED THEN ONLY ONE PROPERTY
WILL BE TREATED AS SELF OCCUPIED
WHILE OTHERS WILL BE TREATED AS
DEEMED LET OUT

14. CONTD.
 PARTLY SELF OCCUPIED AND PARTLYPARTLY SELF OCCUPIED AND PARTLY
LET OUT PROPERTYLET OUT PROPERTY
TREAT THIS PROPERTY AS MORE THAN
ONE PROPERTY AND CALCULATE THE
GROSS ANNUAL VALUE
PROPORTIONATELY (OWNER OCCUPIED
PORTION WILL BE TREATED AS SELF
OCCUPIED AND TENANT OCCUPIED
PORTION WILL BE TREATED AS LET OUT)

15. CONTD.
 PROPERTY LET OUT FOR A PART OFPROPERTY LET OUT FOR A PART OF
THE YEAR AND SELF OCCUPIED FORTHE YEAR AND SELF OCCUPIED FOR
ANOTHER PARTANOTHER PART
THIS PROPERTY WILL BE TREATED AS IF
LET OUT FOR THE WHOLE YEAR AND
FAIR RENT WILL BE TAKEN FOR THE
WHOLE YEAR BUT ACTUAL RENT WILL
BE TAKEN FOR THE PERIOD LET

16. CONTD.
 PROPERTY OWNED BY CO-OWNERSPROPERTY OWNED BY CO-OWNERS
DIFFERENT PORTIONS OWNED BY CO-
OWNERS WILL BE VALUED AS IF IT IS A
CASE OF DIFFERENT PROPERTIES. EACH
SHARE WILL BE A UNIT ITSELF AND
ANNUAL VALUE WILL BE CALCULATED
ACCORDINGLY.

17. TREATMENT OF INTEREST
 IF THE ASSESSEE HAS BORROWED SOME
MONEY FOR THE CONSTRUCTION,
REPAIRING ETC. THEN ACTUAL
INTEREST PAYABLE/PAID FOR THE
CURRENT FINANCIAL YEAR WILL BE
DEDUCTED IN FULL. IF ANY
COMMISSION, ETC. IS PAID FOR
ARRANGING THE LOAN THEN, IT WILL
NOT BE ALLOWED.

18. PRE-CONSTRUCTION INTEREST
 INTEREST PAYABLE BY THE ASSESSEE IN
RESPECT OF THE PERIOD BEFORE THE
CONSTRUCTION WILL BE CALCULATED
FROM THE DATE OF BORROWING TO 31ST
MARCH IMMEDIATELY BEFORE THE
DATE OF COMPLETION OR REPAYMENT
OF LOAN WHICHEVER IS EARLIER.

19. PRE-CONSTRUCTION INTEREST
CONTD.
 THE AMOUNT OF PRE-CONSTRUCTION
INTEREST WILL BE ALLOWED IN FIVE
ANNUAL EQUAL INSTALMENTS
COMMENCING FROM THE PREVIOUS
YEAR IN WHICH THE HOUSE IS
ACQUIRED OR CONSTRUCTED

20. INTEREST IN CASE OF SELF-
OCCUPIED PROPERTY
 WHERE THE PROPERTY IS
ACQUIRED OR CONSTRUCTED WITH
BORROWED MONEY ON OR AFTER 1-
4-1999 AND SUCH CONSTRUCTION IS
COMPLETED WITH IN THREE YEARS
OF THE END OF THE FINANCIAL
YEAR IN WHICH THE CAPITAL WAS
BORROWED, THE DEDUCTION WILL
BE RESTRICTED TO RS. 1,50,000
OTHERWISE RS. 30,000.

21. COMPOSITE RENT
 IF OWNER CHARGES RENT INCLUSIVE
OF SERVICES THEN IT IS KNOWN AS
COMPOSITE RENT.
 IF RENT OF THE PROPERTY CAN BE
RECOGNISED SEPRATELY THEN, IT WILL
BE CALCULTED IN THIS HEAD
OTHERWISE IT WILL BE TAXABLE
UNDER THE HEAD INCOME FROM OTHER
SOURCES OR BUSINESS AND PROFESSION
AS THE CASE MAY BE

22. RECOVERY OF UNREALISED RENT
 WHERE A DEDUCTION HAS BEEN
CLAIMED AND ALLOWED IN RESPECT OF
UNREALISED RENT IN ASSESSEMENT
YEAR 2001-02 OR PRIOR TO THAT AND
SUBSEQUENTLY THE ASSESSEE
REALISES THE AMOUNT, THE AMOUNT
SO REALISED WILL BE TREATED AS
INCOME OF THE YEAR OF RECEIPT
IRRESPECTIVE OF THE OWNERSHIP OF
THE ASSESSEE.

23. CONTD.
 WHERE THE UNREALISED RENT IS
RECOVERED WITH RESPECT OF
ASSESSEMENT YEAR 2002-03 ONWARDS
AND REALISED SUBSEQUENTLY THEN IT
WILL BE TAXABLE DURING THE YEAR
OF RECEIPT, HOWEVER STATUTORY
DEDUCTION OF 30 % WILL BE ALLOWED.

24. SOME ILLUSTRATIONS
1. COMPUTE THE ANNUAL VALUE IN THE
FOLLOWING CASES
A B
Rs. Rs.
FAIR RENT 2,40,000 1,30,000
ACTUAL RENT 2,16,0001,80,000
UNREALISED RENT 36,000 30,000
MUNICIPAL TAX PAID 30,000 20,000

25. SOLUTION 1.
A B
Rs. Rs
GROSS ANNUAL VALUE 2,40,000 1,80,000
LESS: UNREALISED RENT 36,000 30,000
LESS: MUNICIPAL TAXES 30,000 20,000
ANNUAL VALUE 1,74,000 1,30,000

26. ILLUSTRATION 2
MR. A OWNS A HOUSE IN DELHI. FROM THE
FOLLOWING PARTICULARS GIVEN BELOW,
COMPUTE THE INCOME FROM THE HOUSE
PROPERTY FOR THE ASSESSMENT YEAR 2015-16.
MUNICIPAL VALUE 2,20,000
FAIR RENT 2,62,000
STANDARD RENT 2,45,000
ACTUAL RENT (PER MONTH) 24,000
MUNICIPAL TAXES PAID 22,000
EXPENSES ON REPAIRS 10,000
INSURANCE PREMIUM 4,000

27. CONTD.
A HAD BORROWED A SUM OF RS.10,00,000 @ 12%
P.A. ON 1.7.2011 AND THE CONSTRUCTION OF
THE HOUSE WAS COMPLETED ON 28. 2.2014.

28. SOLUTION 2
GROSS ANNUAL VALUE SHALL BE HIGHER OF THE
FOLLOWING TWO:
A) M.V. RS. 2,20,000 OR F.R.V. RS. 2,62,000 BUT
RESTRICTED TO STANDARD RENT, OR 2,45,000
B) ACTUAL RENT (24,000 X 12) (BEING GROSS
ANNUAL VALUE) 2,88,000
LESS: MUNICIPAL TAXES PAID 22,000
NET ANNUAL VALUE 2,66,000
LESS: DEDUCTIONS U/S 24
i) 30% OF N.A.V 79,800
ii) INTEREST ON BORROWED MONEY 1,62,000 2,41,800
INCOME FROM HOUSE PROPERTY 24,200

29. CONTD.
NOTE: CALCULATION OF INTEREST:
i) PRE-CONSTRUCTION PERIOD
10,00,000 X 12/100 X 21/12 X 1/5 42,000
ii) CURRENT YEAR INTEREST
10,00,000 X 12/100 1,20,000
1,62,000

30. ILLUSTRATION 3
Y HAS A HOUSE WHICH HAS TWO IDENTICAL
UNITS. ONE OF THE UNITS IS SELF-OCCUPIED
THROUGHOUT THE PREVIOUS YEAR AND THE
OTHER UNIT IS LET OUT THROUGHOUT THE
PREVIOUS YEAR ON A RENT OF RS. 5,000 P.M.
MUNICIPAL TAXES FOR THE COMPLETE
HOUSE AMOUNTING TO RS. 6,000 HAVE BEEN
PAID DURING THE PREVIOUS YEAR. THE
CONSTRUCTION OF THE PROPERTY WAS
COMPLETED ON 1-1-2013. DETERMINE THE
INCOME FROM HOUSE PROPERTY FOR THE
A.Y. 2015-16.

31. SOLUTION
UNIT I UNIT II
(LET OUT) (SELF-OCCUPIED)
Rs. Rs.
GROSS ANNUAL VALUE 60,000 NIL
LESS: MUNICIPAL TAXES 3,000 -
NET ANNUAL VALUE 57,000 NIL
LESS: STATUTORY
DEDUCTION @ 30% 17,100 NIL
INCOME FROM HOUSE
PROPERTY 39,900 NIL

32. ILLUSTRATION 4
IN THE PREVIOUS QUESTION,
ILLUSTRATION 3, IF SELF OCCUPIED
PORTION WAS LET OUT FOR THREE
MONTHS, THEN WHAT WILL BE THE
INCOME FROM HOUSE PROPERTY?

33. SOLUTION
UNIT I UNIT II
(LET OUT) (SELF-OCCUPIED)
Rs. Rs.
GROSS ANNUAL VALUE 60,000 60,000
LESS: MUNICIPAL TAXES 3,000 3,000
NET ANNUAL VALUE 57,000 57,000
LESS: STATUTORY
DEDUCTION @ 30% 17,100 17,100
INCOME FROM HOUSE
PROPERTY 39,900 39,900

34. ILLUSTRATION 5
WHAT WILL BE THE INCOME FROM HOUSE
PROPERTY IF IN THE PREVIOUS QUESTION,
ILLUSTRATION 4, THE LET OUT PORTION IS
SELF-OCCUPIED FOR 3 MONTHS?

35. SINCE UNIT I, IS PART OF THE YEAR LET OUT
AND PART OF THE YEAR SELF-OCCUPIED, THE
PERIOD OF OCCUPATION OF THIS UNIT FOR
OWN RESIDENCE SHALL BE IRRELEVANT AND
THE ANNUAL VALUE OF SUCH UNIT SHALL BE
DETERMINED AS IF IT IS LET.
HENCE, THE EXPECTED RENT AS PER SEC. 23(1)
(a) SHALL BE TAKEN FOR THE FULL YEAR BUT
THE ACTUAL RENT SHALL BE TAKEN FOR THE
PERIOD LET.
SOLUTION

36. IN THE ABOVE QUESTION, THE EXPECTED RENT
WILL BE TAKEN ON THE BASIS OF ACTUAL
RENT WHICH CAN BE ASSUMED AS FAIR RENT
IN THE ABSENCE OF ANY OTHER INFORMATION
AVAILABLE.
HENCE, THERE WILL BE NO CHANGE IN THE
ANSWER AS THE EXPECTED RENT WILL BE RS.
60,000 ALTHOUGH THE ACTUAL RENT
RECEIVED AND RECEIVABLE SHALL BE RS.
45,000 i.e. RS. 5,000 X 9.
CONTD.

37. X HAS A HOUSE PROPERTY SITUATED IN DELHI.
FROM THE FOLLOWING PARTICULARS
SUBMITTED TO YOU, COMPUTE THE INCOME
FROM HOUSE PROPERTY FOR THE
ASSESSMENT YEAR 2015-16.
MUNICIAPAL VALUATION 90,000
FAIR RENT 1,10,000
STANDARD RENT 1,00,000
THE HOUSE PROPERTY WAS LET OUT W.E.F. 1-4-
2014 FOR RS. 8,000 P.M. WHICH WAS VACATED
BY TENANT ON 30-9-2014.
ILLUSTRATION 6

38. IT REMAINED VACANT FOR 2 MONTHS. AND
W.E.F. 1-12-2014, IT WAS LET OUT FOR Rs.11,000
P.M.
MUNICIPAL TAXES PAID - 20% OF MUNICIPAL
VALUATION
INSURANCE PREMIUM PAID - RS. 3,000
INTEREST ON MONEY
BORROWED FOR PURCHASE
OF HOUSE PROPERTY - RS. 30,000
CONTD.

39. COMPUTATION OF GROSS ANNUAL VALUE
WHICH SHALL BE HIGHER OF THE FOLLOWING
TWO:
A) EXPECTED RENT i.e. MUNICIPAL VALUE OR
FAIR RENT WHICHEVER IS MORE i.e. RS. 1,10,000
BUT IT CANNOT EXCEED RS. 1,00,000 (i.e.
STANDARD RENT). SO, IT SHOULD BE RS. 1,00,000
B) ACTUAL RENT RECEIVED OR RECEIVABLE
8,000 X 6 48,000
11,000 X 4 44,000
92,000
ANNUAL VALUE SHALL BE RS. 92,000 AS IT IS
LESS THAN EXPECTED RENT OWING TO
VACANCY.
SOLUTION

40. CONTD.
Rs.
GROSS ANNUAL VALUE 92,000
LESS: MUNICIPAL TAXES PAID 18,000
NET ANNUAL VALUE 74,000
LESS: DEDUCTIONS U/S 24
A) STATUTORY
DEDUCTION @ 30% 22,200
B) INTEREST 30,000 52,200
INCOME FROM HOUSE PROPERTY 21,800

41. ILLUSTRATION 7
Y OWNS A HOUSE IN DELHI. DURING THE
PREVIOUS YEAR 2014-15, 3/4TH
PORTION OF THE
HOUSE WAS SELF-OCCUPIED FOR FULL YEAR
AND 1/4TH
PORTION WAS LET OUT FOR
RESIDENTIAL PURPOSES FROM 1-4-2014 TO 31-
12-2014 ON A RENT OF RS. 700 P.M. FROM 1-1-2015,
THIS PORTION WAS ALSO USED FOR OWN
RESIDENCE. MUNICIPAL VALUATION OF THE
HOUSE IS RS. 20,000. HE INCURRED THE
FOLLOWING EXPENDITURE IN RESPECT OF
THE HOUSE PROPERTY:

42. CONTD.
MUNICIPAL TAXES DUE RS. 6,000; REPAIRS RS.
2,000; FIRE INSURANCE PREMIUM RS. 3,500; LAND
REVENUE RS. 4,000; GROUND RENT RS. 200 WERE
PAID DURING THE YEAR. A LOAN OF RS. 1,00,000
WAS TAKEN ON 1-4-2005 @ 9% P.A. FOR THE
CONSTRUCTION OF THE HOUSE WHICH WAS
COMPLETED ON 28-3-2006. NOTHING WAS
REPAID ON LOAN ACCOUNT SO FAR.
FIND OUT HIS INCOME FROM HOUSE PROPERTY
FOR THE A.Y. 2015-16.

43. SOLUTION
THERE ARE TWO UNITS OF THE HOUSE . UNIT I
WITH 3/4TH
FLOOR AREA IS SELF-OCCUPIED
THROUGHOUT THE YEAR AND NO BENEFIT IS
DERIVED FROM THAT UNIT, HENCE IT WILL BE
CONSIDERED SELF-OCCUPIED AND ITS ANNUAL
VALUE SHALL BE NIL. UNIT 2 WITH FLOOR
AREA OF 1/4TH
IS THOUGH SELF-OCCUPIED BUT
PART OF THE YEAR LET OUT. HENCE, THE
ANNUAL VALUE OF UNIT 2 SHALL BE
DETERMINED AS PER SECTION 23(1).

44. CONTD.
UNIT I (3/4TH
FLOOR AREA)
ANNUAL VALUE NIL
LESS: DEDUCTIONS U/S 24(B)
INTEREST 75% OF RS. 9,000 6,750
INCOME FROM SELF-OCCUPIED - 6750

45. CONTD.
UNIT II (1/4TH
FLOOR AREA)
GROSS ANNUAL VALUE HIGHER OF THE
FOLLOWING TWO:
A) EXPECTED RENT 8,400
B) ACTUAL RENT RECEIVED OR
RECEIVABLE (700 X 9) 6,300
GROSS ANNUAL VALUE 8,400
LESS: DEDUCTIONS U/S 24
A) STATUTORY DEDUCTION @ 30% 2,520
B) INTEREST (¼) 2,250 4,770
3,630

46. CONTD.
INCOME FROM HOUSE PROPERTY
UNIT I - 6750
UNIT II 3,630
LOSS OF Rs. 3,120

47. THANKS
sirnkgupta@yahoo.com