Calculation of vacancy period in income from house property

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SOURAV GOEL

Articleship Training

64 Points Posted on 10 October 2015

I have 2 Questions, request to provide answers with suitable references/Tax rules etc.

a) How to calculate the Rent for Vacany period when the Property is let out during the year to Two Tenants paying different Rent. Eg. Rent for 1st four months is Rs.80,000, then 4 months vacant and then next 4 months Rent is Rs.1,20,000.

b) What is the taxability if the employees owned house property is taken on rent by the employer and given to the Employee rent-free. Herein the Employer pays the rent to the Employee for the House. Say Rs. 20,000 Per Month.

Replies (2)

Cutiepie..:)))

Executive

55 Points Posted on 24 October 2015

How to compute the gross annual value in the case of a property which is vacant for some time during the year?

A property may remain vacant for some time during the year, i.e., due to non availability of tenant. In such a case, the taxpayer can claim deduction on account of vacancy allowance. In other words, the gross annual value of a property which remained vacant for some time during the year (and was not used for any purpose during the vacancy period) will be computed as follows :

Step 1 Ascertain higher of municipal value or fair rent (subject to standard rent) (we will term it as reasonable expected rent).

Step 2 Ascertain actual rent after deducting unrealised rent and loss on account of vacancy (i.e., rent pertaining to vacancy period)

Step 3 Computation of gross annual value will be as follows:

(a) Gross annual value will be amount at step 2, if the actual rent is less than reasonable expected rent and such reduction is only due to vacancy.

(b) Gross annual value will be reasonable expected rent (i.e., amount at step 1) less loss due to vacancy, if the actual rent is less than reasonable expected rent and such reduction is partly due to vacancy and partly due to other factors.