INCOME FROM HOUSE PROPERTY

[chapter IVC]

Section 22 - 27

A PRESENTATION BY M.S.T.U.,KOLKATA
 GROSS ANNUAL VALUE FOR L.O.P [Sec.23(1)]

Note : Determination of G.A.V. :

1. Municipal Valuation A. Higher of 1 & 2

2. Fair Rent B. Least of A & 3

3. Standard Rent C. Higher of B

4. Rent Received / Receivable #

# Computation of Rent Received / Receivable :

Rent Receivable for the P.Y. /Annual Rent xxx
Less : Unrealised Rent [ Expln. to Sec 23(1)] xxx
xxx
 TABLE - I
M.V 36000 36000 40000
F.R. 39000 38000 42000
STD. RENT N.A 37000 45000

R.E.R. 39000 37000 42000

TABLE - II
I II III IV V
M.V. 20000 20000 20000 20000 20000
F.R. 26000 26000 26000 28000 31000
S.R. N.A 25000 25000 25000 33000
R.R. 22000 22000 27000 27000 30000
G.A.V. 26000 25000 27000 27000 31000
Deduction of Municipal Tax :

From GAV deduct Municipal Taxes ( including Service Tax

) paid by assessee [ i.e. OWNER ] to arrive at NAV.

Deduction u/s. 24 :

The following 2 deductions are available

a) Standard Deduction : 30% of NAV irrespective of

any expenditure incurred by the assessee.

b) Interest on borrowed capital .

 How to determine Income from House Property

I ) Income from Let Out/Deemed to be Let Out Property[Sec 23(1)/23(4) ] :-

Gross Annual Value : xxx

Less : Municipal Tax xx
Net Annual Value xxx
Less : Deduction u/s 24
a) Statutory Deduction @ 30 % of Net Annual Value xxx
b) Interest on borrowed Capital + 1/5 th of Interest for
Pre-construction period xxx xxx
[ For purchase/construction/renovation/re-construction (allowable on accrual basis)]
Income from let-out property xxx

What is pre-construction period ?

Pre-construction period is the period commencing on the date of

borrowing of loan and ending on march 31 , immediately prior to the date of
completion of construction / acquisition or date of repayment of loan –
whichever is earlier.
II) Income from Self Occupied Property [ Sec 23 ( 2) (a) & 23 (2) (b) ] :-
[ Applicable for only two house properties ]
Net Annual Value Nil
Less : Deduction u/s 24
a) Statutory Deduction Nil
b) Interest on borrowed Capital + 1/5 th of Interest for
Pre-construction period xxx xxx
[For purchase/construction/renovation/re-construction (allowable on accrual basis) ]
For purchase or construction maximum deduction is Rs. 2,00,000
For renovation and reconstruction maximum deduction is Rs. 30,000

Income from self occupied property xxx

Find out the income from House property chargeable to tax for the A.Y.
2017-18 in the case of Sri Manoj Vaniya from the following :

Rs
Municipal value 180000
Fair Rent 170000
Standard Rent 150000
Actual Rent 230000
Unrealised rent of P.Y. 2016-17 20500
Municipal Taxes 28000
Interest on borrowed capital ( per annum ) 45000

(2013)
 Name of the assessee : Shri Manoj Vaniya
Status : Individual
A.Y. : 2017-18
Here MV = Rs 180000 FR = Rs 170000 SR = Rs 150000
RR = Rs (230000 – 20500) = Rs 209500
MT = Rs 28000
Interest on borrowed capital = Rs 45000

1. Greater of MV and FR = Rs 180000

2. Lesser of Rs 180000 and SR = Rs 150000
3. Greater of Rs 150000 and RR = Rs 209500
therefore , GAV = Rs 209500
Less : Municipal Tax paid = Rs 28000
----------------------------------------------------------------------
NAV = Rs 181500
Less :
(i) Standard deduction @ 30% = Rs 54450
(ii) Interest on borrowed capital = Rs 45000 Rs 99450

Total taxable income from House Property Rs 82050

 Mr X owns two houses ,the particulars of which are given below for the
assessment year 2020-21:-
House-I House- II

Municipal Value ( Rs ) 61,000 1,85,000 Fair Rental Value

( Rs ) 60,000 1,82,000 Actual Rent ( Rs ) 63,000
1,84,000 Standard Rent N.A. N.A.
Municipal Tax paid ( Rs ) 14,000 40,000
Interest on loan which was borrowed
by mortgagingHouse-1 and funds were
used for construction of House-II (Rs) 18,000
Date of completion of construction March,1999 April, 2001
Compute Income from House Property for the F.Y. 2019-20. (2019)
 Computation of Income from house property of Mr. X for the assessment year
2020-21:-
House-I House- II (Rs)
(Rs)
Municipal Value 61,000 1,85,000
Fair Rent 60,000 1,82,000
Standard Rent N.A. N.A.
Reasonable Expected Rent (MV and FR
whichever is higher subject to maximum
of SR) 61,000 1,85,000 Actual Rent
63,000 1,84,000 Gross Annual value (being higher) 63,000
1,85,000
Less: Municipal Tax paid 14,000 40,000 Net Annual Value
49,000 1,45,000
Less:
-Standard deduction u/s 24(a)
30% of NAV (14,700) (43,500) -Interest on loan u/s
24(b) - (18,000)
Income from House property 34,300 83,500
Mr. Vikas owns a house property whose Municipal Value, Fair
Rent and Standard Rent are Rs. 96,000, Rs. 1,26,000 and Rs.
1,08,000(p.a) respectively. During the financial year 2019-20,
one third of the portion of the house was let out for residential
purpose at a monthly rent of Rs. 5,000. The remaining two-
third portion was self-occupied by him. Municipal tax @ 11%
of municipal value was paid during the year. The construction
of the house began in June, 2012 and was completed on
31.05.2015. Vikas took a loan of Rs. 1,00,000 on 1.7.2012 for
the construction of building. He paid interest on loan @ 12%
p.a. and every month such interest was paid. Compute income
from house property of Mr. Vikas for the Assessment Year
2020-21.
(2018)
 Computation of Income from house property of Mr. Vikash for the assessment
year 2020-21:-
Let Out Self occupied (1/3rd )
(2/3rd )
Municipal Value (1/3rd of 96,000) 32,000 N.A.
Fair Rent (1/3rd of 1,26,000) 42,000 N.A.
Standard Rent (1/3rd of 1,08,000) 36,000 N.A.
Reasonable Expected Rent (MV and FR
whichever is higher subject to maximum
of SR) 36,000 N.A.
Actual Rent (5000 p.m.) 60,000 N.A.
Gross Annual value (being higher) 60,000 N.A.
Less:
Municipal Tax paid (1/3rd of 96000*11%) (3,520) N.A.
Net Annual Value 56,480 Nil
Less:
-Standard deduction u/s 24(a)
30% of 56,480 (16,944) - Interest on loan u/s
24(b): (6,200) (12,400)
Income from House property 33,336 (12,400)
 Calculations of interest on loan:

1) Pre construction period :: From 1.7.2012 to 31.03.2015: (i.e. 33

months)

1,00,000*12%*33/12 = Rs. 33,000 (shall be allowed to be deducted

in 5 equal installments of Rs. 6,600 each).

2) Current interest::
1,00,000*12% = Rs. 12,000

Therefore, total deduction u/s 24(b): (6,600+12,000) = Rs. 18,600.

Let out portion = 1/3rd of Rs.18,600 = Rs. 6,200
Self occupied portion = 2/3rd of 18,600 = Rs. 12,400.
 Find out the Income from house property chargeable to tax for the
assessment year 2020-21 in the following case

Rs.
Municipal Value 1,20,000
Fair Rent 1,30,000
Standard Rent 1,10,000
Annual Rent 1,26,000
Vacancy period 1month
Unrealized Rent 10,500
Municipal tax of the year 2019-20:
- Paid by X during 2019-20 17,000
- Paid by X after March31, 2020 18,000
- Paid by tenants during 2019-20 1,000

(2015)
 Computation of Income from house property of Mr. Vikash for the assessment
year 2020-21:-
Rs. Municipal Value
1,20,000
Fair Rent 1,30,000
Standard Rent 1,10,000
Reasonable Expected Rent (MV and FR
whichever is higher subject to maximum
of SR) 1,10,000
Annual Rent after deducting unrealised rent (126000-10500) 1,15,500
(being higher) 1,15,500
Less: Loss due to vacancy (1,26,000*1/12) 10,500
Gross Annual Value 1,05,000
Less: Municipal Tax paid 17,000
Net Annual Value 88,000
Less:
-Standard deduction u/s 24(a)
30% of 88,000 26,400
Income from House property 61,600
Mr. A is the owner of two House properties – X and Y. He uses X for his
own residence for 8 months and let it out for balance year @ Rs 24000
p.m. The house Y is let out throughout the year as follows :-
April to August @ 11000 p.m.
September to October – vacant
November to March @ 13000 p.m.
He has also paid Rs 52000 interest on bank loan taken by him

Compute His income from House property for A.Y. 2017-18

(2010)
 Name of the assessee : Mr. A
Status : Individual
A.Y. : 2017-18
HOUSE - X [ PARTLY LET OUT ]

Fair rental value = Rs (24000x12) = Rs 288000

Rent received = Rs 96000

GAV = Rs 288000
Less : Municipal Tax paid = NIL
----------------------------------------------------------------------
NAV = Rs 288000
Less :
(i) Standard deduction @ 30% Of NAV = (-) Rs 86400
(ii) Interest on borrowed capital = NIL
Taxable income from House Property X = Rs 201600
 Name of the assessee : Mr. A
Status : Individual
A.Y. : 2017-18
HOUSE - Y[ LET OUT ]

GAV = Rs 120000
Less : Municipal Tax paid = NIL
----------------------------------------------------------------------
NAV = Rs 120000
Less :
(i) Standard deduction @ 30% Of NAV = (-) Rs 36000
(ii) Interest on borrowed capital = (-) Rs 52000
Taxable income from House Property Y = Rs 32000

Total House property income Rs ( 201600 + 32000 ) = Rs 233600

Mr. X is the owner of three House properties – A,B & C during the previous
year. He uses A for his own residence. B is let out for 8 months @ Rs 20000
p.m. The house C is let out as under : -
April to August @ 50000 p.m.
September to October – vacant
November to March @ 60000 p.m.
He has also paid Rs 200000 interest on bank loan taken by him on house A
and interest of Rs 300000 on bank loan for House C. He has also paid Rs.
10000 and Rs 20000 as house tax for house B & C respectively.

Compute His income from House property for A.Y. 2017-18

(2011)
 Name of the assessee : Mr. X
Status : Individual
A.Y. : 2017-18
HOUSE - A[ SELF OCCUPIED ]

GAV = NIL
Less : Municipal Tax paid = NIL
----------------------------------------------------------------------
NAV = NIL
Less :
(i) Standard deduction @ 30% Of NAV = NIL
(ii) Interest on borrowed capital = Rs 200000

Total taxable income from House Property (-) Rs 200000

 Name of the assessee : Mr. X
Status : Individual
A.Y. : 2017-18
HOUSE - B[ LET OUT ]

GAV = Rs 160000
Less : Municipal Tax paid = Rs 10000
----------------------------------------------------------------------
NAV = Rs 150000
Less :
(i) Standard deduction @ 30% Of NAV = Rs 45000
(ii) Interest on borrowed capital = NIL

Total taxable income from House Property Rs 105000

 Name of the assessee : Mr. X
Status : Individual
A.Y. : 2017-18
HOUSE - C[ LET OUT ]

GAV = Rs ( 50000x5 + 60000x5) = Rs 550000

Less : Municipal Tax paid = Rs 20000
----------------------------------------------------------------------
NAV = Rs 530000
Less :
(i) Standard deduction @ 30% Of NAV = (-)Rs 159000
(ii) Interest on borrowed capital = (-)Rs 300000

Total taxable income from House Property Rs 71000

 Name of the assessee : Mr. X
Status : Individual
A.Y. : 2017-18
INCOME FROM HOUSE A = ( - ) Rs 200000

INCOME FROM HOUSE B = Rs 105000

INCOME FROM HOUSE A = Rs 71000

_________________________ ______________

TOAL TAXABLE HP INCOME = (-) Rs 24000

THANK YOU