Tax computation on income from rent

For let-out property there is no cap on the maximum interest that can be availed as deduction under section 24(b) unlike self-occupied property.  In your case the co is making a provision of 1.5lacs whihc is not correct.  the actual interst paid/accrued during the year shud be consdiered.

The Rental income from HP wud be as follows:

Rent Recd                                          xxxx

Less: Municipal Tax Paid                   xx

Net Annual Value                              xxxx

Less: Std Ded @ 30% of Net Annual Value     xxxxx

             Interest on loan paid                                 xxxx

Income from house property                              xxxxxx

You will need to add this figure to your total taxable income while filing the return of income.  You will be required to pay advance tax or you may submit your HP income details to yoru employer, whihc in turn would deduct tax.

You should have declared the income from house property also to your employer. They would have made the deductions for you.

Now, that you have not done the above.

You can compute as follows

Rent Recd                                                                 xxxx

Less: Municipal Tax Paid                                           (xxx)

Net Annual Value                                                      xxxx

Less: Std Ded @ 30% of Net Annual Value           (xxxxx)

             Interest on loan paid                                 (xxxx)

Income from house property                               xxxxxx

also verify the amount of interest paid by you to the financial institution. if it is more than Rs.150000 you will get the benefit of the whole amount.

Your employer has considered the property as Self occupied property for which the maximum deduction available is Rs.150,000 only but if you have given the property on rent it becomes Let out property and if the interest paid is more than Rs.1,50,000 then the whole deduction is available.