income from hp

7/27/2019 Income From Hp

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ForGONSALO GARCIA

TY B.COM STUDENTS

2011-12 BATCH

From

Jose George


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HEADS OF INCOME

INCOME FROM HOUSE

PROPERTY


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INCOME FROM HOUSE

PROPERTY Charging Section S. 22 , Annual Value of

any property consisting of any building or land

appurtenant thereto of which, the assessee is theowner is chargeable to tax under the head Income

from House Property


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INCOME FROM HOUSE

PROPERTY following three conditions: property consists of buildings or lands appurtenant

thereto the assessee should be the owner of the property

the property should not be used by th owner for his own

business


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INCOME FROM HOUSE PROPERTY

Owner includes legal as well as deemed owner Deemed owner as per section 27 includes:

Transfer to spouse without an agreement to live apart or to a

minor, not a married daughter

Holder of an impartible estate Property held by a member of a co-operative society /

company / AOP

A person who has acquired a property under power ofattorney

Person acquired a right on a property under lease


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Owner includes legal as well as deemed owner Deemed owner as per section 27 includes:

Transfer to spouse without an agreement to live apart or to a

minor, not a married daughter

Holder of an impartible estate Property held by a member of a co-operative society /

company / AOP

A person who has acquired a property under power ofattorney

Person acquired a right on a property under lease


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INCOME FROM HOUSE PROPERTY Exempted property income from farm house (u/s 2(1A) (10(1)) annual value of any one palace of an ex-ruler Se.

10(19A)

property income of a local authority (10( 20) property income of an approved scientific research

association (10(21)

property income of an educational institution (10(20C)


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Exempted propertyproperty income of a trade union (10(24)

house property held for charitable purpose (11)

property income of a political party (13A)

property used for own business or profession (22)

one self-occupied property Sec 23(2)


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computation of income from house property depends on thetype of propertylet out House property self -occupied property let out property remain vacant partly let out and partly self occupied deemed to be let out property owned by co-owners

Computation of Annual Value


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let out House property Annual Value XXXLess Muncipal Tax XXXAdj. Annual Value xxx less Deduction u/s 24 XXXIncome from House Property XXX Tax under the head income from House property is not a tax upon rent

of a property. It is tax on the capacity of a building to yield income. The

measure of such income is called Annual Value

Computation of Income from House property


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Annual value is the estimated value ofIncome expected if the property is rented.

Annual value is the

reasonable letting Value orActual Rent of the property which ever is higher.

Reasonable letting value is the Municipal value or Fair rent

which ever is higher restricted to Standard rent a per RentControl Act

Computation of Annual Value of Let out


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reasonable letting value is:Municipal value or Fair rentWhich ever greater restricted to Standard rent

Municipal Valuation is the ratable value fixed by themunicipality for charging municipal tax .

Fair rent is the rent fetched by a similar accommodation in

the same or similar locality Standard rent is the maximum rent which a person can

legally recover from his tenant under the Rent Control Act.

Computation of Annual Value of Let out


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COMPUTATION OF ACTUAL RENTACTUAL RENT Actual rent is applicable only to let out houses.

Actual rent is rent received or receivable. Actual rent

is the rent of the previous year for which the propertywas available for letting out. The unrealised rent, if it

fulfills the conditions, is allowed to deduct from

actual rent receivableActual Rent = Actual rent received or receivable

allowable unrealised rent


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Loss due to vacancy

If the let out property remain vacant for aperiod, the loss due to vacancy is allowed to be

deducted from the highest value, arrived after

comparing reasonable letting value withAnnual Rent. The balance after the deduction

of loss due to vacancy , if any, is the Annual

Value


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Find out the annual Value

H1 H2 H3 H4 H5

Municipal Value 105 105 105 105 105

Fair rent 107 107 107 107 107

Standard rent NA 88 88 135 135

Actual Rent 103 112 86 114 97Unrealised rent (condition

fulfills)

1 2 1 2 1

Period of the previous year (in

months)

12 12 12 12 12

Period for which property

remain vacant

Nil Nil Nil Nil Nil


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AnswerReasonable letting value 107

(fair rent -107, MV- 105 St Rent nil)

Actual Rent (103-1) 102

AR -103; allowable unrealised rent 1The Highest RLV or AR 107

Less loss due to vacancy Nil

Annual Value 107


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(fair rent -107, MV- 105 St Rent 88)




Annual Value 110


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(fair rent -107, MV- 105 St Rent 88)




Annual Value 88


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(fair rent -107, MV- 105, St Rent 135)




Annual Value 107


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Question

X owns a house property (municipal Valuation .1,45,000, fair rent1,36,000 standard rent Rs.

1,24,000 it is let out throughout the previous

year(rent being 8000 per month upto November15, 2010 and Rs. 14000 per month thereafter) X

transfer the property to Y on Jan 31 2011,

Find out the annual Value of the property inthe hands of Mr. X for the assessment year

2011 - 12


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AnswerReasonable letting value 1,03,333

(fair rent -1,36,000/12X10=113,333, MV-

145000/12X 10=120,833, St Rent

124000/12X10=1,03,333)Actual Rent (8,000X71/2+14000X2 1/2)

95000

The Highest RLV or AR 1,03,333


Annual Value 1,03,333


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Loss due to vacancy

If the Annual Rent is less than theReasonable letting Value only because

of the loss due to vacancy , then theAnnual Rent is to be taken as Annual

Value


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Loss due to vacancy

Fair Rent Rs. 24000, MunicipalValuation Rs 28000, Actual Rent Rs.

36,000 (for 12 month) property remainvacant for 1 month) calculate the

annual Value


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(fair rent25000, MV- 28000,

Actual Rent 36000

The Highest RLV or AR 36000Less loss due to vacancy 3000

Annual Value 33000


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AnswerFair rent Rs. 26,000, Municipal Valuation Rs.

30000, Rent Rs. 2000 pr month, 1 month the

property remain vacant and rs. 2000 unrealised

rnt ulfils conitions.


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(fair rent26000, MV- 30000,

Actual Rent (2000 X 12) 24000

Less Unrealised 200022000

The Highest RLV or AR 30000

Lessloss due to vacancy(2000X1)2000 Annual Value

28000


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Deduct Municipal Taxes

From the annual Value deductMunicipal Taxes levied by any local

authority in respect of the houseproperty. This tax is deductible only if

it is actually paid by the owner and

only to the extent it is paid during the

year


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Deduction u/s 24

Standard deduction

Interest on borrowed


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Deduction u/s 24

Standard deduction

Interest on borrowed


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Standard deduction

No deduction can be claimed by an assesseeother than mentioned in section 24. Standard

deduction is allowed irrespective of expenses

incurred by the assessee

30 % of the adjusted annual value isdeductible irrespective of expenses incurred bythe taxpayer


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Interest on Borrowed Capital

Interest on Borrowed capital is allowed as deduction ifcapital is borrowed for the purpose of purchase, construction,

repair, renewal or reconstruction of the property

It is deductible on accrual basis. It can be deductible as

yearly, it is deductible even if it is not actually paid during

the previous year

No deduction for any brokerage or any expenses for arranging

the loan is allowedinterest of a fresh loan taken for the repayment of the

earlier loan is allowed as deduction


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Interest Payable for pre-construction

period

If interest on Borrowed capital is paid prior to the

acquisition or completion of construction, the interest paid

during that period is allowed as deduction in five equalinstallments . But if such amount is allowed as deduction

under any other provision earlier the amt. so deducted is not

allowed as deduction under this provision

Question


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Question Mr. Jeevan has a house in Mumbai, which he used for his

residence in the previous year 2009-10. Due to to his transfer

to Nagpur he could not occupy this house in the previous year2010-11. he stays in a rented house in Nagpur, He has let out

his mumbai house property @ Rs. 12000 per month. He spend

Rs. 2000 for insuring the property and 2000 for repairs. Fair

rent of the house property comes Rs. 13000 per month. The

property remain vacant for 2 months and the unrelised which

fulfills conditions Rs. 10000 calculate the income from HP of

Mr. JEEVAN for the assessment year 2011-12

Answer


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Answer

Let-out House

Annual Value 30000

(Fair rent- 13000 X 12=156000 or MV

Nil, thus RLV =156000, Actual Rent

Rs. 12000 X 12 =1,44000Unrealised rent Rs. 10, 000 Actual

Rent = 144000-10000=134000)

RLV or Actual rent which ever is higher = 156000

Less Loss due to Vacancy (12000 X 2) 24000

Annual Value 132000


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Answer Let-out House

Annual Value 132000

Less Municipal Tax Nil

Adjusted Annual Value 132000Less deduction U/S 24

1. Standard deduction30% of Adjusted Annual Value 39600

2.Interest on Borrowed Capital 2000 41600

Income From House Property 90400


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income from hp

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