rental income

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Vennila (Querist)
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26 June 2010 Hi, one of my friend has purchased a new flat - and pays Interest on Housing loan - Rs.2.4 lacs per annum. He is also getting rent of Rs.5k per month. How should he show this in his IT return? Any help?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 June 2010
Calculate the Gross annual value based on the valuation under Income from House property and deduct the Municipal taxes paid and Standard deduction and Interest on housing loan (fully because Let out property) balance is Income or loss from House property

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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26 June 2010 Rent income 60,000
Less: Deduction u/s 24(a) @ 30% 18,000
Deduction on borrowed capital u/s 24(b) 240,000 258,000
Net loss from house property 198,000

In case of ITr - 1 show the net loss Rs. -198,000/-.

Otherwise in rest ITR seperate colum there.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 June 2010 Dear Aditya ji

What about Municipal value and Fair rental value and Standard rent act - all these point?

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Vennila

Vennila (Querist)
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26 June 2010 Perfect! Thanks!
Just trying to understand a little more....
Less: Deduction u/s 24(a) @ 30% 150,000 (Is this common for all assessees irrespective of loan amt?)
Deduction on borrowed capital u/s 24(b) 240,000 (Is there any limit of interest amt under this sec)

Aditya Maheshwari

Aditya Maheshwari (Expert)
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28 June 2010 My answer was perfectly incorrect.

I had replied taking into account that rent received was Rs. 5L p. a. and not Rs. 5k p. m.

Now the reply has been modified suitably.

Also as Ramesh has pointed out the actual rent being received is a meager sum of Rs. 60,000/- as against interest payment of Rs. 240,000/-.

So u will have to find out the municipal valuation i. e. the rateable value of rent for the property and the higher of both will be liable to tax as rent income. However the same will be restricted to the standard rent as computed by the rent control act of state of residence.

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