1. Made By : Srajan Mor

2. Basic ConceptThis the only head under Income Tax which is charged on Notional Basis.2 3. Basis of Charge Income from House Property as persection 22 of the act. There should be Property. TheProperty must consist of Buildingand Land attached thereto. The Assessee must be the Owner/ Deemed owner ofthe Property. 3 4. Deemed Owner Take thathouse son, Ihave to Save Tax. Transfer to Spouse /Minor Child. Holder of impartible estate. Member of Co-operative society. Person is possession of property through attorney. Person having right in property for not less than 12years. 4 5. Basis of Charge (continued)The Income should be from Letting out of the Property. Use of let out House Property is immaterial. 5 6. Basis of Charge (continued) Exception to USE of House Property The owner should not use the property or any portion of such property for any business or profession carried on by him, profit of which ischargeable to tax.Where the letting of house property is inseparable from letting of other assets. 6 7. Property Income which are Exempt Farm House Palace of Ex-Ruler. Self occupied House Property. Property used for Charitable Purpose. House Property used for own Business of Profession. House Property of registered Trade Union/Local Authority.7 8. Composite RentSituation 1 Where Composite Rent include rent of building andcharges for supplementary services . E.g. Gas, electricity, water, lift services, etc. Then the value of such services should be determined and the Building Rent should be taxed under House Property and services will be taxed under Other Sources or Business Income.8 9. Composite Rent Situation 2 Where Composite Rent include rent of building and otherassets. E.g. Furniture , Equipment, etc. The other assets are inseparable. The total rent including for assets is taxed under OtherSources or Business Income.9 10. Composite Rent Situation 3 Where Composite Rent include rent of building and otherassets. E.g. Furniture , Equipment, etc.The other assets are separable. The total rent attributable to building is taxed as House Property Income and rent for assets is taxed under OtherSources or Business Income. 10 11. How Computation is made ? ParticularAmount (Rs)Gross Annual Value (G.A.V)xxxxLess: Municipal Taxes xxxxNet Annual Value (N.A.V)xxxxLess: Deduction under section 24 :(a) Standard Deductionxxxx(b) Interest on Borrowed CapitalxxxxIncome from House Propertyxxxx 11 12. Gross Annual Value Annual Value of the property shall be the sum for which theproperty might reasonably be expected to let out form yearto year.It will be HIGHER of components: Actual Rent received or receivable and Reasonable Expected Rent 12 13. Reasonably Expected Rent The reasonable expected rent is equals to the HIGHER ofFair Rental Value or Municipal ValuationBut It is limited to Standard Rent fixed by Rent Control Act.13 14. Reasonably Expected Rent Fair Rental ValueFair Rent is the rent which a similar property can fetch in thesame or similar locality, if it is let for a year. Municipal Valuation Municipal value is the value as determined by municipal authority for levying municipal taxes on house property.14 15. Reasonably Expected Rent Standard Rent Standard rent is the rent that is fixed by the Rent Control Act. Rent Control Act dose not apply to every property. The reasonable expected rent cannot be more than StandardRent.15 16. Categories of House Property House Property let out throughout the previous year. House property let out but was vacant for whole or part ofyear. House property which is part of year let and part of year selfoccupied. House property which is self occupied or could not be selfoccupied due to employment. 16 17. Categories of House Property Type 1House property let out throughout the previous year. G.A.V will be Higher of:Actual Rent receivedOrReasonably Expected Rent 17 18. Categories of House PropertyType 2House property let out but was vacant for whole or part of year. Owing to Vacancy, Actual rent is LOWER thanReasonably Expected Rent(RER)Yes NoG.A.V will be Actual Rent G.A.V will be HIGHER ofRER or Actual Rent 18 19. Categories of House PropertyType 3House property which is part of year let and part of year self occupied.G.A.V will be Higher of: Actual Rent received Or Reasonably Expected Rent 19 20. Categories of House Property Type 4House property which is self occupied or could not be self occupied due to employment. The G.A.V of the property will be NIL. This limit is applicable House Property wise. 20 21. Calculation of Gross Annual Value21 22. More than one House Property Where Assessee has more than one house property, which are in occupation for his own residential purpose then he may exercise an option to treat anyone as self occupied. G.A.V of self occupied will be NIL. G.A.V of other will be HIGHER of Actual rent or Reasonable expected rent. 22 23. Municipal Taxes Municipal Taxes are levied by Local Authority on HouseProperty. They are allowed on PAYMENT basis. They are allowed only if paid by Owner and not by Tenantin any case. 23 24. Treatment of Unrealized RentThe amount of rent which the Owner cannot realize from thetenant is known as Unrealized Rent.There are two ways of treating unrealized rent: It should be deducted from the actual rent receivable, or As per income tax return forms it should be deducted fromGross Annual Value.24 25. Deductions from House PropertyDeductions from House Property are given under section 24.There are two deductions:Standard DeductionFrom the Net Annual Value a deduction equals to 30% will be allowed to the Assessee. 25 26. Deductions from House PropertyInterest on Borrowed Capital Where the property has been acquired, constructed or repaired with borrowed capital, the amount of interestpayable is allowed as deduction.Interest paid/payable for the period prior to the previous year in which property is acquired is allowed as deduction.Interest on Interest is not allowed as deduction.26 27. Self occupied House PropertyDeduction Only deduction of Interest will be allowed i.e. standarddeduction u/s 24 will not be allowed.Case I Where amount is borrowed for the purpose of repairs andrenewal of House Property. Deduction will be Actual Interest subject to maximum ofRs.3000027 28. Self occupied House Property DeductionCase II Where the property is acquired or constructed withborrowed capital and The amount is borrowed on or after 1/4/1999 and The acquisition or construction is completed within 3 yearsof the end of FY in which amount was borrowed. Deduction will be actual interest subject to maximum ofRs.15000028 29. Calculation of Deductions29 30. Arrears of RentWhere Assessee is the owner of property and receives any Amount by way of Arrears of Rent Then The amount so received, after deducting a StandardDeduction of 30% will be Deemed to be Income of House Property. 30 31. Unrealized Rent received Subsequently Where the Assessee could not realize rent from a propertyand the same was allowed as deduction and subsequentlythe Assessee has realized the amountThenThe Amount so Realized will be Deemed to be Incomechargeable under the Head Income from House Property 31 32. Property Owned by Co-ownerWhere the property is self occupied by each co-ownerThenthe annual value of the property for each co-owner will beNIL and each of the Co-owner will be allowed deduction of Rs.30000/150000.Where the entire property is let outThenThe income under house property will be computed innormal way and then it will be apportioned among each Co-owner. 32 33. 33