Income under the head House Property.

Basis of Chargeability (Section 22): Any Income under house property is charged if following conditions are satisfied

♦ Property consisting of any buildings or lands appurtenant thereto

♦ Assessee is the owner of the property

♦ Not used for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax

Computation of Income under the head house property

S. No. Particulars Amount
A Gross Annual Value (sec 23(1))* XXX
B Less:  Municipal Taxes borne by the owner XXX
C Net Annual value C=A-B XXX
D Less: Standard Deduction u/s 24(a) @ 30% D=C*30% XXX
E Less: Interest on borrowed Capital u/s 24 (b) XXX
F Income from House Property F=C-D-E XXX

* Expected rent (higher of municipal value or fair rental value of the property, subject to standard rent) or Annual rent whichever is higher

Points to remember

1. Deduction on account of interest on borrowed capital can be claimed for the purpose of purchase, construction, repair, renewal or reconstruction of property

Income from House Property- Points to remember

  • In case of let-out property, there is no limit on the quantum of interest which can be claimed as deduction.
  • In case of self occupied property limit is INR 200,000/-
  • In respect of self-occupied residential house property interest incurred on borrowed capital for reconstruction, repairs and renewal of a house property shall be allowed as deduction up to INR 30,000/-

2. With effect from Assessment Year 2020-21, deduction for interest paid or payable on borrowed capital shall be allowed in respect of two self-occupied house properties

3. Income from subletting of property is not treated income from house property.

4. Interest is classified as per construction period and post construction period.

5. Deduction U/s 24(b) includes interest pertaining to pre construction period and interest pertaining to post construction period.

6. Interest for the preconstruction period is allowed as deduction in five equal installments commencing the year in which the house property is acquired or constructed.

7. When property held as stock in trade and not let out during the whole or any part of the year, as per section 23 (5) annual value of property or part thereof which is held as stock by the owner and not let out during the year shall be taken to be as “NIL” up to the period of 2years from the end of FY in which completion certificate is received.

8. Subsequent recovery of unrealized rent is considered as income under the head “Income from house property” in the year in which such rent is realized.

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Qualification: CA in Practice
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Location: Noida, Uttar Pradesh, India
Member Since: 15 Jun 2020 | Total Posts: 2

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