Income from House Property Calculation
All you need to know about Income from house property, the provisions of applicability, chargeability, calculation of income and various deductions allowed.
The Income Tax Act governs the laws relating to income from house property u/s 22 to 27. It is one of the taxable heads of income. Any income earned by the owner of the property is considered in income from house property.
What is property? Property here refers to immovable property. It consists of any building (office, house, factory, godown, hall, shop, etc.) and any land attached to a building (garage, parking, playground, etc.).
Chargeability Section 22: The annual value of the property belonging to the assessee, who is the owner, is chargeable to tax under income from house property (provided the property is not used for any business or profession conducted by the assessee).
|Gross Annual Value (GAV)||10000|
|Less: Municipal Taxes||(2000)|
|Net Annual Value (NAV)||8000|
|Deduction under section 24|
|i. Standard deduction (30% of NAV)||(2400)|
|ii. Interest on loan||(1500)|
|Income from House Property||4100|
The Gross Annual Value is taken as higher of-
- Fair Rent
- Municipal Valuation
- Actual Rent
If house property comes under Rent Control Act, steps for computing GAV are:
- Higher of Fair Rent or Municipal Valuation
- Lower of amount calculated in (i) or Standard Rent
- Higher of amount calculated in (ii) or Actual Rent
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