Thursday, January 18, 2018

income from house property ay 2018-19

I.Basis of Charge [Section 22]

The annual value of any property comprising of buildings or lands appurtenant thereto, of which the assessee is the owner, is chargeable to tax under the head “Income from house property”.

Exceptions: Annual value of the following properties are chargeable under the head “Profits and gains of business and profession”-
  • (i) Portions of property occupied by the assessee for business or profession carried on by him.
  • (ii) Properties of an assessee engaged in the business of letting out of properties

II. Determination of Annual Value [Section 23]

(1) Annual Value of let-out property [Section 23(1)]

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(2) Annual Value of one self-occupied property [Section 23(2)/(3)]: 

Where the property is self-occupied for own residence or unoccupied throughout the PY owing to his employment, business or profession carried on at any other place and residing at that other place in a building not belonging to him, its Annual Value will be Nil, provided no other benefit is derived by the owner from such property.

(3) Annual Value of deemed to be let out property [Section 23(4)]:

If more than one property is so self-occupied/unoccupied, the assessee may claim benefit of Nil Annual Value in respect of any one property at his option. The other property(s) would be deemed to be let out, in respect of which Expected Rent would be the GAV.

(4) Annual value where the property held as stock-in-trade etc. [Section 23(5)]:

Where property is held as stock-in-trade and the whole or any part of the property is not let out during the whole or any part of the PY, the annual value of property or part of the property, for the period upto 1 year from the end of the F.Y. in which certificate of completion of construction of the property is obtained from the competent authority, shall be taken as “Nil”.

III.Deductions from Net Annual Value 

[Section 24]

Notes –
  • (1) Pre-construction interest allowable as dedn in 5 equal installments from the P.Y. of completion of construction.
  • (2) If a portion of the property is let out and a portion self-occupied, then, income will be computed separately for let out and self-occupied portion.

IV.Taxability of recovery of Unrealised rent & Arrears of rent received [Section 25A]

  • (i) Taxable in the year of receipt/ realization
  • (ii) Deduction@30% of rent received/ realized
  • (iii) Taxable even if the assessee is not the owner of the property in the financial year of receipt/ realization.

V.Co-owned property [Section 26]

Self-occupied property

The annual value of the property of each co-owner will be Nil and each co-owner shall be entitled to a deduction of  Rs. 30,000 /Rs. 2,00,000, as the case may be, on account of interest on borrowed capital.

Let-out property

The income from such property shall be computed as if the property is owned by one owner and thereafter the income so computed shall be apportioned amongst each co-owner as per their specific share.


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