There are certain instances where income from house property is not taxable. Under section 10 of the Income-tax Act 1961 following incomes from house property are exempted from tax. These incomes are not to be included in the total income of assessee. Hence no tax is payable on such incomes. These incomes are:
1. Agricultural House Property [Section 2(1)(c)]
Income from such house property which is situated on or in the immediate vicinity of agricultural land which is used for agricultural purposes by cultivator is exempted from tax.
2. House property held for charitable purposes [Section 11]
Any income from a house property held for charitable or religious purposes e.g., rent from shops owned by a temple is also exempted.
3. Self-occupied but vacant house [Section 23(3)]
In case an assessee keeps one of his own houses reserved for self-occupation but is living in a rented house elsewhere due to his employment or profession the income from such house is taken to be nil.
4. House used for own business or profession
There is no income chargeable to tax under this head from such house property.
5. Property held by resistered trade union [Section 10(24)]
Income from a house property owned by a resistered trade union is not to be included in its G.T.I.
6. Income from house property held by the following shall be exempted
(i) House property held by a local authority.
(ii) House property held by a scientific research institution.
(iii) House property held at a political party.
(iv) House property held by a university and any other educational institution working for spreading education and not to earn profit.
(v) House property held by a hospital or medical institution working for the spreading of medical services to people and are not meant for earning profit.
7. One house property (a palace) owned by a former ruler of Indian states
Ex-rulers of Indian states may be owning many palaces but only one palace of their choice shall be treated as a self occupied house and shall be exempted.
8. One self occupied house
In case assessee owns one residential house, the net annual value of the same shall be taken as nil but in case he owns more than one house, then only one of his choice but normally of higher value shall be treated as a self occupied one and other/others are treated as deemed to be let out.
9. House Property held as Stock-in-Trade and not let out during the previous year [Section 23(5)]:
Where any house property (building and land appurtenant thereto) is held as stock-in-trade and the property is not let during the whole or part of the year. The annual value of such property shall be taken as nil for the period upto one year from the end of the financial year in which the certificate of completion is obtained.
In case of a Cooperative Society
In case of a cooperative society, income from following house properties is includible in Gross Total Income but a deduction allowed from the Gross Total Income in the following cases:
1. Income from any other Property [Section 80P(2)(b)]
In case the gross total income of a co-operative society does not exceed 20,000, any income derived by it from house property and included in its gross total income, the whole of such income is allowed as deduction while computing its total income. Co-operative society in this case should not be a housing society or an urban consumer's co-operative society or a society carrying a transport business.
2. Letting out of godown by co-operative societies [Section 80P(2)(c)]
If a co-operative society lets out godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of its income derived from letting out of houses or storages etc. is deductible in computing its total income.
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