The document discusses key concepts related to income tax in India, including:
1. Income tax is levied on the income of individuals and companies by the government and is the major source of revenue.
2. For a company to be considered a resident in India for tax purposes, its control and management must be wholly situated in India. An Indian company is always considered a resident.
3. A company's tax liability depends on whether its income is considered Indian income or foreign income based on where the income is received/accrued. Indian income is always taxable in India for resident and non-resident companies.
The document discusses the taxation of income from house property under the Indian Income Tax Act. It covers the key concepts around deemed ownership, calculation of gross annual value, deductions allowed for municipal taxes and interest on borrowed capital, and the treatment of self-occupied properties. The document provides examples to illustrate how income from house property is computed for different ownership and occupancy scenarios.
This document provides an overview of the key sections related to computing income from house property under the Indian Income Tax Act. It discusses sections 22-27 which relate to the chargeability and basis of taxing income from house property. It describes how to calculate the annual value of a property whether it is let out for the full year, partially let out and vacant, or self-occupied. It also covers deductions allowed for interest paid on loans for house property and treatment of unrealized rent. The document summarizes rules for co-owned properties and deemed ownership under section 27.
Objectives & Agenda :
One of the heads of income under the Income Tax Act is Income from House Property. Under this head, incomes earned from house properties are chargeable to tax. The webinar covers the aspects of basis of charging income to tax under this head, nature of house properties taxed under the Act, manner of computing income chargeable to tax under this head, deductions available under this head and eventually judicial precedents pertaining to this head of income.
Income From House Property New 2008 09 Assessment YearAugustin Bangalore
This document provides an overview of income from house property under the Indian Income Tax Act. Some key points covered include:
1. Income from house property is taxed based on the notional annual rental value of the property, whether rented or self-occupied.
2. For a property to be classified as a house property, it must have characteristics of a building and be owned by the assessee. Income from sub-let properties falls under 'income from other sources'.
3. Interest paid on loans for house property is deductible. Even if the net annual value is negative, interest paid can still be deducted.
This document provides an overview of income from house property under the Indian tax code. It defines house property, outlines the conditions for income from a house to be taxed, discusses deemed ownership, and key terminology used to calculate taxable income from a house property such as annual value, municipal value, fair rental value, and standard rent. It also explains how to compute income from house property by determining the gross annual value, deducting taxes and unrealized rent, and then deducting standard deductions and interest on borrowed capital. The document notes interest deductions that can be claimed for self-occupied and let-out properties. It also discusses interest relating to the pre-construction period of a house property.
1. Income from house property is taxed under section 22 if the property is owned, consists of buildings or land, and is not used for business purposes.
2. Gross annual value is the standard to assess income and is the higher of expected rent and actual rent received less vacancy.
3. Deductions include municipal taxes paid, standard deduction of 30% of net annual value, and interest on borrowed capital. Income from self-occupied property allows deduction of interest up to Rs. 1.5 lakh.
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.
The document discusses the taxation of income from house property under the Indian Income Tax Act. It covers the key concepts around deemed ownership, calculation of gross annual value, deductions allowed for municipal taxes and interest on borrowed capital, and the treatment of self-occupied properties. The document provides examples to illustrate how income from house property is computed for different ownership and occupancy scenarios.
This document provides an overview of the key sections related to computing income from house property under the Indian Income Tax Act. It discusses sections 22-27 which relate to the chargeability and basis of taxing income from house property. It describes how to calculate the annual value of a property whether it is let out for the full year, partially let out and vacant, or self-occupied. It also covers deductions allowed for interest paid on loans for house property and treatment of unrealized rent. The document summarizes rules for co-owned properties and deemed ownership under section 27.
Objectives & Agenda :
One of the heads of income under the Income Tax Act is Income from House Property. Under this head, incomes earned from house properties are chargeable to tax. The webinar covers the aspects of basis of charging income to tax under this head, nature of house properties taxed under the Act, manner of computing income chargeable to tax under this head, deductions available under this head and eventually judicial precedents pertaining to this head of income.
Income From House Property New 2008 09 Assessment YearAugustin Bangalore
This document provides an overview of income from house property under the Indian Income Tax Act. Some key points covered include:
1. Income from house property is taxed based on the notional annual rental value of the property, whether rented or self-occupied.
2. For a property to be classified as a house property, it must have characteristics of a building and be owned by the assessee. Income from sub-let properties falls under 'income from other sources'.
3. Interest paid on loans for house property is deductible. Even if the net annual value is negative, interest paid can still be deducted.
This document provides an overview of income from house property under the Indian tax code. It defines house property, outlines the conditions for income from a house to be taxed, discusses deemed ownership, and key terminology used to calculate taxable income from a house property such as annual value, municipal value, fair rental value, and standard rent. It also explains how to compute income from house property by determining the gross annual value, deducting taxes and unrealized rent, and then deducting standard deductions and interest on borrowed capital. The document notes interest deductions that can be claimed for self-occupied and let-out properties. It also discusses interest relating to the pre-construction period of a house property.
1. Income from house property is taxed under section 22 if the property is owned, consists of buildings or land, and is not used for business purposes.
2. Gross annual value is the standard to assess income and is the higher of expected rent and actual rent received less vacancy.
3. Deductions include municipal taxes paid, standard deduction of 30% of net annual value, and interest on borrowed capital. Income from self-occupied property allows deduction of interest up to Rs. 1.5 lakh.
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.
- Income from house property is taxed on a notional basis and includes any building with characteristic features of a building such as residential buildings or cinemas.
- For a property to be considered under the head house property, it must be owned by the assessee and not used for their own business or profession.
- The annual value of a property is its expected rental income and may be taken as actual rent received in some cases, with exceptions for vacant properties.
The document discusses income from house property under the Indian Income Tax Act. It defines key terms like house property, annual value, basis of charge, and ownership.
Some key points covered are:
- House property means any building owned by the assessee, including residential or commercial properties.
- The basis of charge is the annual value of the property, defined as the expected rental income.
- For a property to be counted as house property, it must consist of a building and land, and the assessee must own it and not use it for their own business.
- Deemed ownership provisions attribute ownership to certain relatives or in cases of transfer without adequate consideration.
- The annual value
This document discusses income from house property under section 22 of the Income Tax Act. It covers topics such as:
1. The basis for charging income from house property including the conditions that the property must consist of buildings/lands, the assessee must own the property, and the property cannot be used for the assessee's own business.
2. Computation of income from let out and self-occupied house properties including determining annual value, allowable deductions, and the tax treatment of rental income.
3. Some exemptions to income from house property like income from farm houses and properties used for approved charitable purposes.
house property, income from house property, let out property, vacant let out property, self occupied property, deemed let out property,
lop, vlop, sop, dlop, gross annual value, gav, reasonable letting value, rlv, municipal rateable value, mrv, starndard rent,
actual rent received, arr, municipal tax, deduction u/s 24, standard deduction, interest on loan, pre construction interest,
post construction interest, unrealised rent, arrears of rent, co-ownership, deemed owners, composite rent,
The document discusses various aspects of calculating income from house property for tax purposes in India. It explains that the annual value of a house, which is the inherent capacity of the property to earn income, is taxed. It provides details on how to compute the gross annual value, net annual value, and annual value by making deductions. Certain property incomes are exempt from tax. The determination of annual value is important for taxation of income from house property.
This document discusses income from house property under section 22 of the Indian Income Tax Act. It defines annual value, deemed ownership, gross annual value, deductions allowed from house property income like interest on borrowed capital, and provides examples of practice sums to calculate income from house property.
The document discusses income from house properties under the Indian Income Tax Act. It defines income from house properties as taxable if the property consists of a building or land, the taxpayer owns the property, and it is not used for business purposes. It provides details on computing income by determining gross annual value, deducting expenses like taxes and interest payments, and outlines special provisions for self-occupied properties and rental properties. The document also discusses topics like deemed ownership, treatment of vacant properties, co-owned properties, and the tax treatment of unrealized rent.
This document provides an overview of income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any buildings or lands owned by the assessee. It discusses the conditions for a property to be taxed under this head, deductions allowed from annual value, ownership and deemed ownership, exempted property incomes, and special provisions for co-owned properties.
1) There are 5 heads of income under the Indian Income Tax Act: income from salary, house property, business or profession, capital gains, and other sources.
2) Computation of taxable income involves determining residential status, classifying income, aggregating, applying clubbing provisions, deducting losses, exemptions, and rebates to calculate total tax payable.
3) Income from salary includes wages, pension, gratuity, fees, commissions, perquisites, and advances. Certain allowances like conveyance, education, transport, and house rent are fully or partially exempted.
4) Income from house property is based on annual value, which is the expected rent (municip
The document discusses income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any buildings or lands owned by an assessee. It provides details on computation of gross annual value, deductions allowed, treatment of self-occupied properties, and exempted incomes from house property. The key steps involved in computing income from house property are determining the annual value, calculating the net annual value, and claiming allowed deductions.
The document discusses the taxation of income from house property under the Income Tax Act of 1961 in India. It covers topics such as the basis of charging income from house property, deemed ownership, exemptions, computation of annual value for let out and self-occupied properties, and deductions allowed such as municipal taxes and interest on borrowed capital. The key points are that income from house property is taxable unless used for business purposes; deemed owners include those who transfer property to their spouse or minor children; and deductions from annual value include standard deductions and interest expenses.
The document discusses various aspects of income from business and profession under the Income Tax Act in India. It covers the charging section, meaning of business, income chargeable and not chargeable under this head, computation of business income, deductions allowed, depreciation, treatment of scientific research expenditure and more. Key points include that income from business includes profits from any profession, compensation for know-how, partner's salary, and export incentives. Deductions like rent, repairs, depreciation, and scientific research expenditure are allowed from business income.
The document discusses the valuation of assets for wealth tax purposes in India. It outlines the steps to value a self-occupied residential building, including calculating the gross maintainable rent (GMR) and net maintainable rent (NMR), capitalizing the NMR, and making adjustments for unbuilt area and unearned increase. It also provides an example calculation valuing a leasehold house. The objective is to understand asset valuation and the filing and assessment of wealth tax returns.
The document discusses income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any buildings or lands owned by an assessee. There are different categories of house properties - let out, deemed let out, self-occupied, and vacant. The gross annual value is the expected rent, which is the higher of municipal value and fair rent subject to a maximum of standard rent. From the gross annual value, deductions can be claimed for taxes paid, standard deduction of 30% of net annual value, and interest on loans for self-occupied properties.
The document discusses the taxation of income from house property under the Indian Income Tax Act. It defines income from house property as income generated from any building or land owned by an assessee. It outlines the conditions for a property to be classified under this head, the definition of an owner, exemptions, methods of computing annual value for let out and self-occupied properties, deductions allowed, and examples of computations.
The document discusses the taxation of income from house property in India. It defines income from house property as notional income based on the annual rental value of a property, rather than actual rental income. It covers topics like classification of properties as self-occupied, let out, or deemed let out; computation of gross annual value; permitted deductions like standard deductions and interest on home loans; set-off of losses; and an example computation.
Income from House property explained in detail. One of these heads is “Income from House property”. The income earned by the ownership of a property is said to be Income from House property. If a taxpayer owns a house property and rents it, the rent received from that property is taxable. Your house, building, office, or shop can be termed as house property All types of properties are taxed under the head 'income from house property' in the income tax return.
- Income from house property is taxed on a notional basis and includes any building with characteristic features of a building such as residential buildings or cinemas.
- For a property to be considered under the head house property, it must be owned by the assessee and not used for their own business or profession.
- The annual value of a property is its expected rental income and may be taken as actual rent received in some cases, with exceptions for vacant properties.
The document discusses income from house property under the Indian Income Tax Act. It defines key terms like house property, annual value, basis of charge, and ownership.
Some key points covered are:
- House property means any building owned by the assessee, including residential or commercial properties.
- The basis of charge is the annual value of the property, defined as the expected rental income.
- For a property to be counted as house property, it must consist of a building and land, and the assessee must own it and not use it for their own business.
- Deemed ownership provisions attribute ownership to certain relatives or in cases of transfer without adequate consideration.
- The annual value
This document discusses income from house property under section 22 of the Income Tax Act. It covers topics such as:
1. The basis for charging income from house property including the conditions that the property must consist of buildings/lands, the assessee must own the property, and the property cannot be used for the assessee's own business.
2. Computation of income from let out and self-occupied house properties including determining annual value, allowable deductions, and the tax treatment of rental income.
3. Some exemptions to income from house property like income from farm houses and properties used for approved charitable purposes.
house property, income from house property, let out property, vacant let out property, self occupied property, deemed let out property,
lop, vlop, sop, dlop, gross annual value, gav, reasonable letting value, rlv, municipal rateable value, mrv, starndard rent,
actual rent received, arr, municipal tax, deduction u/s 24, standard deduction, interest on loan, pre construction interest,
post construction interest, unrealised rent, arrears of rent, co-ownership, deemed owners, composite rent,
The document discusses various aspects of calculating income from house property for tax purposes in India. It explains that the annual value of a house, which is the inherent capacity of the property to earn income, is taxed. It provides details on how to compute the gross annual value, net annual value, and annual value by making deductions. Certain property incomes are exempt from tax. The determination of annual value is important for taxation of income from house property.
This document discusses income from house property under section 22 of the Indian Income Tax Act. It defines annual value, deemed ownership, gross annual value, deductions allowed from house property income like interest on borrowed capital, and provides examples of practice sums to calculate income from house property.
The document discusses income from house properties under the Indian Income Tax Act. It defines income from house properties as taxable if the property consists of a building or land, the taxpayer owns the property, and it is not used for business purposes. It provides details on computing income by determining gross annual value, deducting expenses like taxes and interest payments, and outlines special provisions for self-occupied properties and rental properties. The document also discusses topics like deemed ownership, treatment of vacant properties, co-owned properties, and the tax treatment of unrealized rent.
This document provides an overview of income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any buildings or lands owned by the assessee. It discusses the conditions for a property to be taxed under this head, deductions allowed from annual value, ownership and deemed ownership, exempted property incomes, and special provisions for co-owned properties.
1) There are 5 heads of income under the Indian Income Tax Act: income from salary, house property, business or profession, capital gains, and other sources.
2) Computation of taxable income involves determining residential status, classifying income, aggregating, applying clubbing provisions, deducting losses, exemptions, and rebates to calculate total tax payable.
3) Income from salary includes wages, pension, gratuity, fees, commissions, perquisites, and advances. Certain allowances like conveyance, education, transport, and house rent are fully or partially exempted.
4) Income from house property is based on annual value, which is the expected rent (municip
The document discusses income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any buildings or lands owned by an assessee. It provides details on computation of gross annual value, deductions allowed, treatment of self-occupied properties, and exempted incomes from house property. The key steps involved in computing income from house property are determining the annual value, calculating the net annual value, and claiming allowed deductions.
The document discusses the taxation of income from house property under the Income Tax Act of 1961 in India. It covers topics such as the basis of charging income from house property, deemed ownership, exemptions, computation of annual value for let out and self-occupied properties, and deductions allowed such as municipal taxes and interest on borrowed capital. The key points are that income from house property is taxable unless used for business purposes; deemed owners include those who transfer property to their spouse or minor children; and deductions from annual value include standard deductions and interest expenses.
The document discusses various aspects of income from business and profession under the Income Tax Act in India. It covers the charging section, meaning of business, income chargeable and not chargeable under this head, computation of business income, deductions allowed, depreciation, treatment of scientific research expenditure and more. Key points include that income from business includes profits from any profession, compensation for know-how, partner's salary, and export incentives. Deductions like rent, repairs, depreciation, and scientific research expenditure are allowed from business income.
The document discusses the valuation of assets for wealth tax purposes in India. It outlines the steps to value a self-occupied residential building, including calculating the gross maintainable rent (GMR) and net maintainable rent (NMR), capitalizing the NMR, and making adjustments for unbuilt area and unearned increase. It also provides an example calculation valuing a leasehold house. The objective is to understand asset valuation and the filing and assessment of wealth tax returns.
The document discusses income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any buildings or lands owned by an assessee. There are different categories of house properties - let out, deemed let out, self-occupied, and vacant. The gross annual value is the expected rent, which is the higher of municipal value and fair rent subject to a maximum of standard rent. From the gross annual value, deductions can be claimed for taxes paid, standard deduction of 30% of net annual value, and interest on loans for self-occupied properties.
The document discusses the taxation of income from house property under the Indian Income Tax Act. It defines income from house property as income generated from any building or land owned by an assessee. It outlines the conditions for a property to be classified under this head, the definition of an owner, exemptions, methods of computing annual value for let out and self-occupied properties, deductions allowed, and examples of computations.
The document discusses the taxation of income from house property in India. It defines income from house property as notional income based on the annual rental value of a property, rather than actual rental income. It covers topics like classification of properties as self-occupied, let out, or deemed let out; computation of gross annual value; permitted deductions like standard deductions and interest on home loans; set-off of losses; and an example computation.
Income from House property explained in detail. One of these heads is “Income from House property”. The income earned by the ownership of a property is said to be Income from House property. If a taxpayer owns a house property and rents it, the rent received from that property is taxable. Your house, building, office, or shop can be termed as house property All types of properties are taxed under the head 'income from house property' in the income tax return.
The document discusses the taxation of income from house property under the head "Income from House Property" in India. It defines key terms like total income, owner, deemed ownership. For a property to be taxed under this head, it must be owned by the assessee and not used for business purposes. The annual value is taxable, which is the expected reasonable rent. Standard deductions are available and interest on borrowed capital can be deducted. Unrealized rent is not taxed under certain conditions.
1) The document discusses the computation of income from house property under the Indian Income Tax Act, including definitions of key terms, the basis for charging the income, methods for determining annual value and gross annual value, deductions allowed, and tax treatment of self-occupied properties.
2) It provides examples of how to calculate gross annual value and income from a let out property, and outlines the deductions available for interest on loans for self-occupied properties.
3) Losses from self-occupied properties can be set off against other income of the same assessment year.
income from house property full pdf for studychaitra742243
The document discusses the computation of income from house property under the Income Tax Act. Some key points:
1. Annual value of let out properties is the higher of expected rent (higher of municipal value and fair rent, capped at standard rent) and actual rent received/receivable.
2. For self-occupied properties, annual value is nil for up to two properties. For additional self-occupied properties, annual value is deemed to be expected rent.
3. For properties let out for part of the year and self-occupied for part, expected rent for the full year is considered. Municipal taxes paid can be deducted.
4. Properties held as stock can have nil annual value for 2
This document discusses the taxation of income from house property under the Indian Income Tax Act. It defines house property as taxable if owned and outlines the different categories of house property - let out property, self-occupied property, deemed let out property. It then explains how to compute the annual value, deductions allowed, and calculation of net income from house property. Key steps include determining the gross annual value, deducting municipal taxes and standard deduction, and subtracting interest on borrowed capital to arrive at the net income from house property which is taxable.
A property tax or millage rate is an ad valorem tax on the value of a property, usually levied on real estate. The tax is levied by the governing authority of the jurisdiction in which the property is located. This can be a national government, a federated state, a county or geographical region or a municipality.
This document provides an overview of the computation of income from house property under the Indian Income Tax Act. It defines key terms like annual value and outlines the steps to calculate gross annual value. It describes the deductions available for let out properties as well as the treatment of self-occupied properties. The document also discusses topics like deemed ownership, recovery of unrealized rent, and set-off and carry forward of losses from house property.
This document discusses the calculation of income from house property under the Indian Income Tax Act 1961. It defines income from house property as income arising from houses, buildings, godowns, or any other residential property owned by an individual. The key aspects covered include determining the annual rental value, deductions allowed for municipal taxes, standard deduction, and interest on borrowed capital for purchasing or constructing the property. The overall process of calculating the net income from house property under different scenarios is also summarized.
Method of Computation of Income from House PropertySundar B N
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) The document discusses income tax calculations related to house property in India. It covers topics like calculating income from self-occupied, let out, and inherited properties.
2) Homeowners can claim deductions on their income tax return for items like standard deduction, interest paid on home loans up to Rs. 2 lakh, principal repayments up to Rs. 1.5 lakh, and other charges related to home purchases.
3) There are different methods to calculate the rental value of a let out property for tax purposes, such as actual rent received, municipal rental value, fair rental value, and expected rental value.
The document provides an overview of income tax treatment of income from house property in India. It defines what constitutes a house property and the conditions for income to be taxable under this head. Income from house property is calculated as gross annual value less municipal taxes and standard deduction of 30% of net annual value. For a let out property, gross annual value is the expected rent as per municipal valuation or fair rent, less vacancy losses. Deductions include interest on borrowed capital for acquisition or construction of the property. Up to two self-occupied properties can be treated as self-occupied, with the rest deemed let out.
This document discusses the basics of house property tax in India. It explains that any residential or commercial property is taxable, including buildings, hostels, and attached land. Self-occupied properties are not taxed, and homeowners can claim up to two properties as self-occupied. Rental properties are taxed based on their annual rental income less deductions. Deductions include property taxes, a standard 30% deduction on net annual value, and interest on home loans. Any losses from a self-occupied property can be adjusted against other income. An example calculation of income tax on a rental property is provided.
Income from other sources as per Section 56 includes any income which is chargeable under the Income Tax Act but does not fall under the other heads of income such as salary, house property, business or profession, and capital gains. This includes winnings from lotteries, puzzles, races, and card games, as well as interest earned on securities. Such income is taxed at specific rates depending on whether the recipient is an individual, domestic company, or non-domestic company.
The document discusses the taxation of income from house property under the Indian Income Tax Law. It provides details on computation of gross annual value, deductions allowed, treatment of self-occupied properties, pre-construction period interest, and practical examples. Key aspects covered include defining rental income as income from house property, computation of gross annual value using fair rental value, municipal valuation or actual rent whichever is higher, deductions for municipal taxes and interest on loans.
This document discusses the taxation of income from house properties under the Income Tax Act. It covers topics like annual value, deductions allowed, treatment of unrealized rent, deemed ownership, and calculation of taxable income from house properties. The key points are:
- Income from house properties is taxable if the property is owned and not used for business/profession.
- Annual value will be the reasonable expected rent or actual rent received/receivable and forms the gross annual value.
- Deductions like interest on loans and standard deduction can be claimed to arrive at the net taxable income.
3. Introduction
Income tax is a one of the major sources revenue to the government . The name tax indicates
compulsory contribution or payment of money by various persons to the government.
Income Tax means tax chargeable under the provisions of the income tax act [ Sec.2(43)]
In general sense income tax means tax on the income of the assessee whose income exceeds
the specified limit in the previous year and is chargeable at the prescribed rate.
Income tax can be charged only when the central Act, which normally is the Finance Act,
enacts that income tax shall be charged for any assessment year at the rate or rates
specified therein.
Every money receipt by a person is not chargeable to tax. Section 14 of the Act specifies five
heads of income on which tax can be imposed under the Income tax Act.
4. In order to be chargeable, an income has to be brought under one of these five heads.
The heads are
(i ) salaries
(ii) Income from House property
(iii) profits and gains of business or profession
(iv) capital gains and
(v) income from other sources.
In the discussion to follow, the relevant provisions of the Act relating to Income from
House Property would be considered and how the computation of income from this
source is to be made, namely, how the income is to be worked out and what are the
deductions to be given for computing the taxable income shall be explained. Sections
22 to 27 of the Act deal with the subject of taxation of income from house property.
5. Section 22 of the IT Act 1961
Section 22 provides for taxation of „annual value‟ of a property consisting of any
buildings or lands appurtenant thereto, of which the assessee is owner, under the head
“income from House Property”. Tax imposed under section 22 is a tax on „annual
value‟ of house property and is not a tax on “House Property”. However, if a house
property is occupied by a taxpayer for the purpose of business or profession carried on
by him (the profits of which are chargeable to income tax), annual value of such
property is not chargeable to tax under the head „Income from House Property‟
Conditions Necessary For Taxing Income From House Property:
These are:
• The property should consist of any building or land appurtenant thereto.
• The assessee should be the owner of the property.
• The property should not be used by the owner for the purpose of any business or
profession carried on by him, the profits of which are chargeable to tax. Unless all the
aforesaid conditions are satisfied, the property income cannot be charged to tax under
the head „Income from House property‟.
6. Determination of Annual Value of Self-occupied property:
In case of one self-occupied house property which has not been actually let out at any
time, the annual value is taken as „nil‟. If, one is having more than one house property
using all of them for self-occupation, he is entitled to exercise an option in terms of
which, the value of one house property as specified by him will be taken at nil. The
annual value of the other self occupied house properties will be determined on
notional basis as if these had been let out.
The annual value of such a property would be taken to be nil subject to the following
conditions:
• The assessee must be owner of only one house property.
• He is not able to occupy the house property because of his employment, business
etc. being away from place where the property is situated.
• The property should not have been actually let.
• He has to reside at the place of employment in a building not belonging to him
[Section 23(2)(b)].
• He does not derive any other benefit from the property not occupied.
7. Determination of Annual Value of Let out house properties:
In respect of a let out house property, the rent received is usually taken as the annual let table
value. When, however, the rent is not indicative of the actual earning capacity of the house, the
notional annual value will have to be found and adopted. The standard rent would be the Annual
Value in the case of properties, subject to Rent Control Legislation, as mentioned earlier.
However, when the actual rent received or receivable is higher than the notional value as
calculated above, the higher figure will be taken for the purpose of Income-tax. From the annual
value as determined above, municipal taxes are to be deducted if the following conditions are
fulfilled:
1.The property is let out during the whole or any part of the previous year (There is no such
deduction in respect of a self-occupied house property).
2. The Municipal taxes must be borne by the landlord. (If the municipal taxes or any part thereof
are borne by the tenant, the same will not be deductible).
3. The municipal taxes must be paid during the year. (Where the municipal taxes have become due
but have not been actually paid, these will not be allowed. The municipal taxes may be claimed on
payment basis i.e., only in the year they were paid even if the taxes belonged to a different year).
Amount left after deduction of municipal taxes is net annual value
8. INCOME FROM HOUSE PROPERTY
It is one of the important head of the income under this head income tax payable by
the assessee on the annual value of the property consisting of any building or land
appurtenant there to of which he is a owner.
Important concepts or terms in Income from house property
1. Annual value (Sec.23):
Annual value is the basis for arriving at the income to taxed under this head. Hence the
determination of the correct amount of annual value of house property is important step
in computation of income from house property.
2. Gross Annual Value [Sec.23(1)]:
In India the Gross Annual value is the current value, the actual rent (whether received or
receivable) or the fair rental value, whichever is highest or which the property might be
expected to attract on the open market in ideal circumstances where there is neither a
glut nor a shortage of accommodation.
9. In other words,
The Gross Annual Value (GAV), also called just the Annual Value, of a property is used
in calculating the tax or rent which should be applied to the property.
Gross Annual Value can be understand with the help of following steps
Step.1: Municipal value or fair rent whichever is higher OR
Step 2: The amount arrived in step 1 or standard rent whichever is lower OR
Step 3: The amount arrived in step 2 or actual rent received whichever is higher.
Note: The computation of Gross Annual value occurs only in case of Let Out house
property but it is not so in case of Self occupied house property.
3. Actual Rent:
It means rent received minus unrealized rent and loss due to vacancy.
4. Unrealized rent: It means the rent which the owner could not collect or recover the
same from the tenant.
10. Types of House Property
Based on the computation of annual value house property can be divided in to two
categories such as;
1. Self Occupied House Property.
2. Let out house property.
1.Self Occupied House Property : If any one Building or house property occupied by the
assessee for his own residence during the previous year is called self occupied property.
Notice that he must occupied house property for whole years.
If assessee occupied more than one house for his self occupied purposes in that case
any one house can be treated as self occupied house of which annual value is Nil,
Remaining house should be treated as let out house property only. It is determined at the
option of the assessee.
11. Expenses allowable and Deductions allowable for self occupied house property:
1.Interest on loan taken for acquisition, construction, repairs and renovation
2.Pre construction period interest ( in 5 Annual equal installment )
Expenses allowable and Deductions not allowable for self occupied house property:
1.Municipal tax paid by owner or tenant is not allowed
2.Standard deduction u/s 24 is not allowed
3.Ground rent, Collection charges, Legal charges, repairs, insurance etc are not an allowable
expenses.
Proforma/ specimen of Computation of
Income from Self Occupied House Property for relevant A.Y 0000
Particulars Amount
Self-occupied House:
Gross annual value Nil
Less : Municipal tax Paid ( Not allowed ) ----
Annual Value Nil
Less : 1.Standard deduction @30% ( Not allowed ) ----
2. Interest on loan taken for acquisition/repair/renovation xxx
preconstruction period (in 5 equal instalment) xxx xxx
Income from Self occupied house property xxxx
12. Example with imaginary Figures
Particulars Amount
Gross annual value Nil
Less : Municipal tax Paid ( Not allowed ) -----
Annual Value Nil
Less: Deductions U/s 24
1.Standard deduction @30% ( Not allowed ) ----
2. Interest on loan taken for acquisition/repair/renovation 3000
preconstruction period interest (i.e. 10000x1/5) 2000 -5000
Income from Self occupied house property -5000
2.Let out house property: Let out house property means any building or house property let-
out to other persons in partly or fully during the previous year for which assesse collects
certain amount of money as a rent is called Let out house property.
Before computation of income from let-out house property we should compute Gross
annual value.
It can be calculated by using following Steps.
13. Calculation of Gross Annual Value:
Particulars Amount
Step(1) : Municipal value xxx
OR
Fair Rent xxx
Whichever is higher xxx
Step(2) : Results of Step(1) xxx
OR
Standard Rent xxx
Whichever is lower xxx
Step(3) : Results of Step(2) xxx
OR
Actual Rent received (Rent-Unrealised Rent ) Xxx
Whichever is more xxx
Less : Loss due to vacancy xxx
Gross annual value xxx
14. Note:
1.Municipal Value : Municipal Value means the annual letting value of the property as fixed by the
purposes of levying municipal taxes.
2.Fair rent: Fair rent means the rent that the property might reasonably expected to fetch from year
to year depending upon the locality, rent of similar properties in the surrounding area, etc.
3. Standard rent: Standard rent is the as fixed under the provisions of the Rent Control Act.
Example with imaginary Figures
Particulars Amounts
Step(1) : Municipal value 800000
OR
Fair Rent 600000
Whichever is higher 800000
Step(2) : Results of Step(1) 800000
OR
Standard Rent 1000000
Whichever is lower 800000
Step(3) : Results of Step(2) 800000
OR
Actual Rent received (1200000-200000) 1000000
Whichever is higher 1000000
Less: Loss due to Vacancy 250000
Gross Annual Value 750000
15. Expenses allowable and deductions allow
able for Computing income from Let Out House Property:-
1.Expenses Allowable: Municipal Tax paid by the owner or assessee during the previous. It
is collected at municipal value at certain Percentage.
2.Deductions Allowable: As per Sec.(24) following deductions are allowable
1) Standard deduction at 30% on annual value.
2) Interest on loan taken for Construction, acquisition, repairs and renovation of house
property.
3) Pre-construction period interest in 5 equal annual installment.
Expenses not allowed and deductions not allowed in computation of income from Let-
out house Property:-
1) Municipal tax Paid by tenant and municipal tax due is not an allowable expenses.
2) Expenses like repairs, insurance, fire insurance, ground rent, cost of amenities, collection
charges etc. should not be considered.
16. Proforma of Computation of Income from Let-out House
Property
Particulars Amount
Gross Annual value xxx
Less: Municipal tax paid xxx
Annual value xxx
Less: Deductions U/s 24 :
1. Standard deduction @30% on annual value xxx
2. Interest on loan taken for acquisition/ construction/ repairs/
renovation of house property. xxx
3. Pre-construction period interest xxx xxx
( in 5 equal annual installment )
Income from let-out house property xxxx
17. Remarks:
1. Rent on Sub-letting of house property is not taxable under the head income from
house property but it is taxable under the head income from other sources.
2. The loss on house property can be sett-off either against income from other house
property or it can be sett-off against income arrived in other head of incomes.
19. Residential Status & Tax Incidence
Residential Status of a company Sec. 6(3) :
An Indian company is always resident in India. A foreign company is resident in
India only if , during the previous year , control & management of its affairs is
situated wholly in India.
20. Points to be Kept in view at time of determining the
Residential Status of the Company :
1. Control & mgmt. refers to “Head & Brain”
2. Place of control & incorporation may differ
3. A company may be resident in more than one country
4. Central control & mgmt. lies where meeting of board of directors held
5. Place of operation may be differ from place of control of business
6. Control is different from shareholding control
7. A non-Indian company s de facto control must be in India
for residence in India
21. Residential Status & Tax Incidence Sec 5 :
According to Income Tax Act 1961, incidence of tax on a tax payer depends on
their residential status and also on the place of accrual or receipt of income In
case of company assessee, tax incidence depends upon following two
1. Indian Income &
2. Foreign Income
22. Indian Income:
Any of the following three is an Indian Income:
1.If income is received or deemed to be received in India during the previous
year & at the same time it accrues or arises or deemed to be arises in India during
previous year.
2. If income is received or deemed to be received in India during the previous
year but it accrues or arises outside India during previous year
3.If income received outside India during previous year but it accrues or arises
deemed to be accrues or arises in India during previous year.
23. Foreign Income :
If following two conditions are satisfied, then
such is foreign income-
1.If income is not received or not deemed to be received in India &
2.Income does not accrue or arise or does not deemed to accrue or arise in India.
Type of Income Resident in India Non-resident in
India
Indian Income Taxable in India Taxable in India
Foreign Income Taxable in India Not Taxable in India
24. Company :
Section 2(17) of the act defines company. The term company includes:
1.any Indian company
2.any corporate incorporated by or under the laws of country outside India
3.any institution, association or body which is or was assessable or was assessed
as a company for any assessment year under the 1922 Act or under the 1961 act
any institution, association or body, whether incorporated or not and whether
Indian or non Indian, which is declared by general or special order of the board to
be a company only for such assessment year or assessment years.
25. Indian Company
Indian company means a company formed and registered under the companies
act, 1956. Any company formed and registered under any law relating to
companies formerly in force in any part of India, other than Jammu and Kashmir
and the union territories as specified or a corporation established by or under a
central, state or provincial act or any institution, association or a body which is
declared by the board to be company under section2(17) are referred as Indian
company. In the case of state of Jammu and Kashmir, a company formed and
registered under any law for the time being in force in the state. Similarly in case
of union territories
26. Previous year :
The Financial Year in which the income is earned is known as the previous year.
Any financial year begins from 1st of April and ends on subsequent 31st March.
The financial year beginning on 1st of April2007 and ending on 31st
March2008isthe previous year for the assessment year 2008-2009.
Income :
There is no specific definition of income but for statutory purposes there are
certain items which are listed under the head income. These items include
those heads also which normally will not be termed as income but for
taxation we consider them as income. These items are included under
section2(24) of the income tax act, 1961. As per the definition in
section2(24), the term income means and includes:
27. INCOME :
1. Profits and gains
2. Dividends
3. Voluntary contributions received by a trust
4. The Value of any perquisite or profit in lieu of salary taxable under clause (2) and (3) of section 17of the act
5. Any special allowance or benefit, other than those included above
6. Any allowance granted to the assessee either to meet his personal expenses or at a place where he ordinarily
resides or to compensate him for the increased cost of living.
7. Capital gains
8. Any sum chargeable to income tax under section28of the income tax act
9. Any winnings from lotteries, crossword puzzles, races, including horse races, card games and games of any
sort or from gambling or betting of any form or nature whatsoever
10. Any received as contribution to the assessee's provident fund Gross Total Income
11. Under the scheme of computation of total income under the Income Tax Act, the income falling under each
head is to be computed as per the relevant provisions of the Act relating to computation of income under
that head. The aggregate of income under each head is known as 'Gross Total Income'