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Income from house property

Kanhaiya (Tax Practicner) (42 Points)

04 September 2015

An assessee lives in his house only six month and after that he goes out owing to changing the place of service. Then he let out his house for the remaining 6 month.

Municiple Valuation of the House is 150000

Fair Rent of the house is 175000

Standered Rent of the house is 180000

Actual Rent received 90000 for six month 15000*6 month

I am confused in this situation that Municipal Valuation, Fair Rent and Standered Rent will also be taken for 6 month like that MV is 75000 and FR 87500 & SR 90000.

Please help me anyone its urgent.

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19 Replies

Udgam Koomar (Tax Technologist) (1949 Points)
Replied 04 September 2015

I think actual rent is applicable as its just oe house, if it was second house then your confusion was genuine.

S. Shiroor (Others) (1207 Points)
Replied 04 September 2015

1) First Compute gross annual value as per Sec. 23(1)(a)

a) It will be Higher of MV or FR (standard rent is not applicable I think) = 175000

b) Rent actually paid = 90000

Since the property is let out and was vacant for part of the year and the actual rent received is less than the value determined u/s 23(1)(a), Sec. 23(1)(c) would be applicable.
Therefore, the gross annual value shall be the actual rent received or receivable

Hence GAV is lower of two 90000

2) GAV =90000 less Municipal taxes paid say X so Net annual value is

90000 - X

3) deduct 30% statuary deduction i.e deduct 0.3 x ( 90000- X)

4) Deduct int on Borrwed capital - say Y

5) Income from House property will be 0.7 x ( 90000 - X) - Y

i hope i am correct on this.

Other experts also plz put ur inputs

Kanhaiya (Tax Practicner) (42 Points)
Replied 04 September 2015

But confusion is that house is vacant owing to not residing of owner in the house. not owing to tanent. what will be made in this case.

S. Shiroor (Others) (1207 Points)
Replied 04 September 2015

House is occupied by owner for 6 months and 6 months tenant is there.

In return you have to rented out.

khemraj (student) (21 Points)
Replied 04 September 2015

You have to compute the GAV assuming that the house is rented for the whole year but consider only the actual rent received/recievable

Sarika Goswami (Student CA Final ) (28 Points)
Replied 04 September 2015

i am also satisfied with Mr. khemraj...

Kanhaiya (Tax Practicner) (42 Points)
Replied 04 September 2015

Yaaa Sarika Goswami Mr. Khemraj may be right. Did you read this topic Sarika ??????

Sarika Goswami (Student CA Final ) (28 Points)
Replied 04 September 2015

yaa, i have read this topic very well..

Rajesh Kumar Gupta (Senior Divisional Manager) (714 Points)
Replied 04 September 2015

90000 is frv for tax purposes if well documented and not understated. Treat it as Gross rent deduct allowable deductions. This is net income +/- will form part of GTI.

CA.Deepu Rani Bisht (Chartered Accountant) (26 Points)
Replied 04 September 2015

calculate the income as let out for whole year but calculation should be as given below.

1. first of all MV OR FR( for 12 month) whichever is higher 150000 or 175000 = 175000

2. after that Std. rent or option 1 value whichever is lower. 180000 or 175000 = 175000

3. then actual rent calculate on 12 month basis or option 2 value WIH. 90000*12/6 or 175000=180000

4. if in option 3 actual rent is selected then only actual rent received for 6 month as gross annual value . 180000/6= 90000

Udgam Koomar (Tax Technologist) (1949 Points)
Replied 04 September 2015

Copy DRB, This is the best way.

Stranger (.) (5526 Points)
Replied 04 September 2015

Since the property has been let out, so benefit of self occupation will be lost & accordingly GAV will be computed as per sec-23(1). So ur GAV will be Rs. 1.75 lakhs, i.e., for the whole year. Hope ur doubt is cleared now.

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