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Applicability Computation of Income Deductions
Standard
Land / Let – Out Property
Owner Deductions @30%
building
Occupied Property
Interest on Loan.
• Self
Meaning
Real / Registered
Exceptions
Beneficial
• Vacant
Partly Self Occupied /
Partly Let out
Assumed
Deemed to be Let Out Recovery of Arrear /
Unrealized Rent
4. 1
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CHARGEBILITY [SECTION 22] Call Us: +91 9643 929 913
HOUSE PROPERTY Not Used in BUSINESS /
OWNERSHIP PROFESSION
(H.P)
Legal
Land • Registered Owner If the H.P is used for purpose of
• Surrounded by Wall (With / business / Profession it is not taxable
Without Roof ) as Income from House Property .
Beneficial
• Appurtenant to Building Like • Who is enjoying the
Parking , Approach Road , property like an Owner
Backyard Example :
Deemed / Fictional Letting Out to Employees / Ancillary
Building • Transfer to Spouse/Minor Child units / Government Agency .
• Residential + Commercial without adequate consideration.
• Permanent Structure • Holder of Impartible Estate
• Roof not necessary for Non – • Property Held by Member of
Residential H.P Like Stadium Company / AOP (House building EXCEPT FOR MARRIED
Swimming Pool , Etc. Scheme) DAUGHTERS
• Person who holds property in
part performance of Contract
VACANT LAND IS NOT • Lease >12 years EXCEPT WHEN TRANSFER IS
HOUSE PROPERTY DONE OWING TO AN
AGREEMENT TO
Property which is legally LIVE APART .
INCOMPLETE RUINED not divisible
HOUSE IS NOT
HOUSE PROPERTY
4. 2
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COMPOSITE RENT Call Us: +91 9643 929 913
(Rent of Building +Rent for Assets / Services)
SEPARABLE INSEPARABLE RENT
RENT (Like Letting of hotel Rooms ,
Auditorium, etc.)
Rent for Rent for Other
Building Assets/Services
PGBP / Income
from Other
Sources
Income From PGBP/ Income
House From Other Sources
Property(H.P) (O.S)
➢ Co-ownership : When a property is co-owned by 2/more persons and their share is
definite and ascertainable , share of each person is taxable in their hands .
➢ Each co-owner can claim deduction u/s 23(2)(a) and 23(2)(b).
➢ Partners Property used by the firm for its business/profession is not taxable for partner.
➢ NAV of Property held as Stock in trade is NIL for 2 years , beyond which is taxable .
4. 3
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One Self occupied palace of an ex-ruler
H.P of Local Authority
H.P of Approved Scientific Research Association
H.P of Education Institution
PROPERTIES
EXEMPT
H.P. of a Hospital
H.P. of a Resident of Ladakh
H.P of a Political Party
H.P of a Trade Union
A farm House
H.P held for Charitable purpose
H.P held for own business/ profession
4. 4
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C O M P U TAT I O N O F I N C O M E O F L E T - O U T P R O P E R T Y
PARTICULARS AMOUNT
GAV
Gross Annual Value(GAV) xxx
Less : Municipal Tax Paid xxx HIGHER OF
Actual Rent Receivable
Net Annual Value xxx Reasonable
(A.R.R)
Less : Standard Deduction xxx Expected Rent Less
U/S 24(a) 30% (R.E.R) Unrealised Rent (U.R)
Less : Interest on Loan xxx
U/S 24(b)
HIGHER OF
Gross
Income from House Property xxx Municipal Fair Rent (F.R)
Value (G.M.V)
Subject to Standard Rent (SR)
Tax must be Paid by
assesse Advance tax
is not deductible
Not allowed if paid by Tenant SR is the FR = Rent
maximum fetched by Where ARR is less
rent as per similar due to vacancy ,
NIL in case of Negative NAV Rent Control property in
GMV is the value Act . GAV = ARR
determined by similar locality .
Municipality
4. 5
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DEDUCTIONS - SECTION 24
Standard Deduction Interest on Loan (Section 24(b))
(Section 24(a)) (Acquisition / Construction, Repair,
Reconstruction)
30% of NAV
Pre- Post –
irrespective of
construction Construction
Actual
period Period
Expenditure
Amount of
Amount of Start date End Date
Start Date End Date Deduction
Deduction
Commencement 31st March of Accumulated
of Construction the F.Y prior to 1st April of Allowed in
Interest to be
OR Date of the When the loan the
allowed in the F.Y in which
Borrowing is fully repaid respective
year in which 5 F.Y’s from Construction
year on
(Which ever is construction year of Completes
accrual basis
later) completes. Completion.
4. 6
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SELF OCCUPIED PROPERTY (S.O)
FULLY PARTLY
NAV = 0
Upto 2 Self Occupied Properties *
Partly used for
Partly Vacant Partly Let out Business / Profession
Treated as Treated as Partly Treated as Partly
Self occupied Self occupied and
Fully Self and Partly as Let Partly as
occupied Out
Profits and Gains
Business Profession
4. 7
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Monetary Limit on Deduction of Interest on Borrowed Capital for
SELF OCCUPIED Property
Repair, Renewal, Renovation,
Acquisition / Construction
Extension
Any other
Loan after Rs.30,000
Case
1/4/1999
And
Construction
completed within
5 years and In case of Let Out Property , there is no limit on
Certificate from deduction of Interest on Loan.
Lender regarding
utilisation of Loan
If a Property remains unoccupied
(due to reason of business /
Profession / Employment )
Rs. 2,00,000 it should be treated as Self Occupied
4. 8
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RECOVERY OF UNREALIZED RENT
[SECTION 25A]
T A X A B L E IN THE YEAR OF R E C I E P T AFTER ALLOWING
STANDARD DEDUCTION @30%
NO OTHER
TAXABLE IN THE YEAR OF DEDUCTION
RECIEPT , EVEN IF THE ALLOWED
RECIEPIENT IS NOT OWNER IN
THAT YEAR .
TAXABLE ON
CASH BASIS
4. 9
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