Income Tax - House Property

Introduction

• Free Practice Batch: Income Tax
• One Shot Detail Revisionary Video: House Property
• Next Chapter: Salary

Income under House Property

• Basis of Charge (§22)
  • There should be a building in the house property
  • Income to the owner of the property will be deemed under house property
  • If the property is used for business or profession, it will be deemed under PGPP
• Under Tenant Land: Which is unbuilt area

House Property: Four Major Conditions

1. There should be a building in the property
2. The assessee should be the owner of the property
3. The property can be used for any purpose, but not for business
4. The property is held as stock in trade

Income Calculation

• Gross Annual Value (GAV)
  • Fair Rent, Municipal Value, Standard Rent, Actual Rent
  • Expected Rent = Lower of (Fair Rent, Municipal Value)
  • GAV = Higher of (Expected Rent, Actual Rent)
• Deductions
  • Based on municipal tax payment
  • Standard Deduction: 30% of NAV
  • Interest on capital borrowed

Vacancy and Self-Occupied Property

• If the property is not let out for the entire year or is vacant
• For self-occupied, NAV = 0, Standard Deduction = 0
• Maximum interest deduction for two house properties: ₹2 lakh

Composite Rent

• Separable Rent: House property income under house property and income from other assets under PGPP/other sources
• Inseparable Rent: Entire rent under PGPP/other sources

Other Important Points

• Unrealized Rent: Unrecovered income can be reduced from actual rent
• Deemed Ownership: Deemed owner is also included as owner
• Interest Deduction: Pre-construction period interest is allowed in 5 installments

Specified House Property

• Joint Ownership: Calculation will normally be done, and the resultant income will be divided among the owners

Finally

• Summary of the revision of house property is given
• The next session will be on Salary