Income From bnvvbHouse Property Saksham (2)

8/10/2019 Income From bnvvbHouse Property Saksham (2)

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INCOME FROMHOUSE PROPERTY

SUBMITTED BY :SAKSHAM JAISWAL


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ACKNOWLEGEMENT

I am using this opportunity to express my

gratitude to everyone who supported me inpreparing this presentation . I am thankful for

their aspiring guidence , invaluably constructivecriticism and friendly advice to prepare this

presentation . I am sincerely grateful to them for

sharing their truthful and illuminating views ona number of issues related to the presentation .I express my warm thanks to Ms.Sakshi Chauhan

for their support and guidance .


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CHARGEABILITY [SECTION 22]The following three conditions must be satisfiedbefore the income of the property can be taxedunder the head Income from House Property :

1.The property must consist of buildings and landsappurtenant thereto,

2.The assessee must be the owner of such house

property,3.The property may be used for any purpose, but itshould not be used by the owner for the purpose ofany business or profession carried on him, the profit

of which are chargeable to tax .


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Deemed Ownership [Section 27]

The following persons though not the legal owners of aproperty are deemed to be the owners :

Transfer to a spouse

[Section 27(i)]

Transfer to a minorchild

[Section 27(i)]

Holder of a impartibleestate

[Section 27(ii)]

Member of a Co-operative Society, etc.

[Section 27(iii)]

Person in possession ofa property

[Section 27(iiia)]

Person having right in aproperty for a periodnot less then 12 years

[Section 27(iiib)]


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Composite RentIn certain cases, the owner charges rentfrom the tenant not only on account of rentfor the house property but also on accountof service charges for various facilitiesprovided with the house. Such rent isknown as composite rent.


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When income from house propertyis not charged to tax

Farm house

Property held for charitable purpose

House property used for own business/profession

Self occupied house

House property of registered trade union

Place of ex-ruler

INCOMEDERIVED

FROM


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What is Annual Value?

As per section 23(1)(a), the annualvalue of any property shall be the

sum for which the property mightreasonably be expected to be letfrom year to year.

It may neither be the actual rentderived or the notional rent whichcould have been derived, had the

property been let .


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Computation of annual value ofa property [Section 23(1)]

Gross Annual Value xxxxxxxxxx

Less : Municipal Taxes paid xxxxxxxx

Annual value xxxxxxxx


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Different categories ofproperties

House property which is let throughoutthe previous year

House property which is let and wasvacant during whole or any part ofprevious year.

House property which is part of the yearlet and part of the year self occupied.

House property which is self occupiedfor residential purposes or could notactually be self occupied owing toemployment in any other place.

The annualvalue has to

bedeterminedfor differentcategories ofproperties.These are:


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(A)House property which is letthroughout the previous year

In determining the annual valuethere are four factors which arenormally taken intoconsideration. These are: Actual rent received or receivable

Municipal Value Fair rent of the property Standard rent


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Determination of Gross AnnualValue

G.A.V

HIGHER

Expected rent

Higher

Municipal value Fair rent

Actual rent


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(B) House which is let and was vacantduring the whole or part of previous

year Situation 1 Where actual rent received is higher than expected rent

G.A.V

Higher

Value

Actualrent

Expectedrent


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Situation 2Owing to such vacancy, the actual rentreceived or receivable is less than theexpected rent,In this case, the gross annual value shall bethe actual rent received or receivable .

G.A.V

Actual rent


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(C). House property which is part of the yearlet and part of the year occupied for ownresidence

Its annual value shall be determined as per theprovisions relating to let out property. In this case, the expected rent shall be taken for full

year but the actual rent received or receivable shall be

taken only for the period let.

G.A.V

Higher Value

Actual rent Expected rent


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Treatment of unrealized rent The actual rent received or receivable shall not

include the amount of rent which the owner cannot

realize, subject to the rules made in this behalf . Itshould be deducted from clause (b) or (c) of section23(1).

Unrealised RentThe amount of rent which the owner cannot realise fromtenant.


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Deduction from Income from

House Property

Standard deduction: From the net annual valuecomputed, the assessee shall be allowed a standarddeduction of a sum equal to 30% of the net asset value.

Interest on borrowed capital : Where the property hasbeen acquired , constructed etc. with borrowed capital,the amount of interest paid on such borrowed capital isallowed as deduction . [ Circular No. 363,dated 24.6.1983]


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Interest on pre construction

period Interest attributable to the period prior tocompletion of construction: In such a caseinterest paid/payable for the period prior to

the previous year in which the property isacquired/constructed will be aggregated andallowed in five successive financial year .


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(D). Computation of income of a property whichis self occupied for residential purposes or couldnot actually be self occupied owing to

employment

Where the annual value of such house shall be nil: Where the property consists of a house or a part of a

house which:

is in the occupation of the owner for the purposes ofhis own residence and no other benefit is derivedthere from; or

Cannot actually be occupied by the owner by reasonof the fact that owing to his employment, business orprofession carried on at any other place .


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Where assessee has more thanone house for self-occupation

If there are more than one residential houses, which arein the occupation of the owner for his residentialpurposes then he may exercise an option to treat any one

of the houses to be self occupied .

The other house(s) shall be deemed to be let out andthe annual value shall be the sum for which theproperty might reasonably be expected to let from yearto year.


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Deduction in respect of one self-occupied house where annual value

is Nil However, the assessee will be allowed deduction onaccount of interest as under:

(a) Where the property is acquired or constructed with capitalborrowed on or after 01/04/1999 and such acquisition orconstruction is completed within 3 years of the end of thefinancial year in which the capital was borrowed: Actual

interest payable subject to maximum of Rs 150,000

(b) In any other case, i.e. borrowed for repairs orrenewal or conditions mentioned in clause (a) are not

satisfied: Actual interest payable subject to amaximum of Rs 30,000


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Computation of Annual value ofone self occupied property

Gross Annual Value NILLess: Municipal Tax paid NILNET ANNUAL VALUE NIL

Less: Standard Deduction NILLess: Interest on borrowed capital DeductibleIncome from Self occupied Property ***********


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House property owned by Co-owners [Section 26]

If a house property is owned by two or more persons, thensuch persons are known as co-owners. When the share ofeach co-owner is definite and ascertainable, it has beenprovided that each of the owners will be assessed

individually in respect of share of income from theproperty. When each of the co-owners of a property uses it for his

residence, each of them will also get the concessionaltreatment in respect of one self occupied property.


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Loss from house property

There can be loss under the head income from houseproperty

(i) In the case of a self-occupied property, theannual value is taken as nil.

(ii) In respect of any other house property, there can be lossunder this head in respect of such properties due to municipal

taxes as well as deductions. Similarly, deductions under section 24in case of property deemed to be let out can be more than net

annual value.


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Determination of Income fromHouse Property

Gross Annual Value *******Less: Municipal Taxes *******Net Annual Value *******Less: Deduction under section 24

Standard Deduction (@30%) *******Interest on borrowed capital *******

Income from House Property *******


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Name - SAKSHAM JAISWALReg. No. -CRO0475610B h N 83

Income From bnvvbHouse Property Saksham (2)

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