This document discusses the computation of income from house property under the Indian Income Tax Act. It defines income from house property as rental income or profits from selling a house, building, or other property. It explains that there are three types of house properties: self-occupied, let out, and deemed let out. Key terms related to house property income like municipal value, fair rental value, standard rent, and annual value are also defined. The document concludes by showing an example computation of taxable income from house property for an assessment year.

1. Method of Computation of Income
from House Property
Under the guidance of
Sundar B. N.
Asst. Prof. & Course Co-ordinator
GFGCW, PG Studies in Commerce
Holenarasipura
Sushmitha P
2nd M. Com

3. Introduction:-
The income arising out of a house
property either in the form of a rental income or on
its transfer is reffered to us ‘ income from house
property’. In essence , any property such as house,
building, office warehouse is treated as ‘house
property‘ under the income tax act.

4. Meaning:-
The income tax act had divided the income
received by an individual in various heads for
simplification of tax computational. One of these heads is
“ Income from house property “ . The income earned by
the ownership of a property his said to be income from
house property. If a tax payer owns a house property and
rents it, the rent received from that property is taxable.

5. Types of house property:-
1.Self occupied property
2.Letout property
3.Deemed to be let out property

6. Terminologies associated with income
from house property:-
1.Muncial value:-
Is the value of the house property that is
calculated by the muncipal authorities for imposing
muncipal taxes.
2.Fair rental value: -
Is the Fair rent that can be charged for a
similar property with the same Features in the
same locality.

7. 3.Standard rent:-
Is the rent determined under rent control
act. The property owner cannot charge a rent
higher than the standard rent fixed under rent
control act.
4.Annual value:-
This is the actual rent received or to be
received by the property owner on renting out the
house.

8. 5.Deduction:-
Are the rebates that are given to the
taxpayer as benefits for making investments. These
are deducted to ascertain the actual taxable income.
The taxpayer can claim these deduction under
section 24 of the income tax act 1961.

9. 6.Standard deduction:-
You can claim 30% of the net annual value as a
deduction of repairs, rent and so on ( irrespective of actual
expense incurred is, this deduction will not be permitted in
case the gross annual value is nill.
7.Interest on home loan:-
Deduction can be claimed for interest on home loan
under sec 24 of the income tax act. The limit under this sec is
₹ 200000.

11. Computation of income from house
property
PARTICULAR AMOUNT
Gross annual value
less:- muncipal taxes
Net annual value
Less:-deduction under sec 24
Standard deduction at 30%
Interest paid on borrowed loan
Income from house property
XXX
(XXX)
XXX
(XXX)
(XXX)
(XXX)
XXX

12. Problem:-
During the assessment year 2019-20 XYZ
lamping submits the following in
formulation.
1. Fair rent value ₹ 60000
2. Muncipal value ₹ 46000
3. Annual value ₹ 50000
4. House has vaccant for two month during
the year 2018-19
5. Muncipal tax paid ₹ 4000
6. Repairs ₹ 20000
7. Insurence premium paid ₹ 12000
Determine the taxable income from house
property of the XYZ company

13. Particulars ₹ ₹
Fair rent
Muncipal value
Standard rent
Actual rent 50000/12=4167*10
Gross annual value
less;:- muncipal tax
Net annual value
Less:- deduction under sec 24
a) Standard deduction on 30% On NAV(56000*30/100)
b) Interest on loan
Taxable income from house property
60000
45000
60000
-
60000
41670
60000
4000
56000
16800
-
39200
39200
Computation of income from house property for
the year of 2019-20

14. Conclusion :-
In a nutshell, it is always a better option
to get complete knowledge of the taxes and
proper assessment of incomes with this article
you can get apro active approach to plan
strategically where and how to invest in
properties to gain maximum returns and charged
minimum taxes.

15. Reference:-
https://cleartax.in > income tax.
https://tax2win.in/guide/house
property.