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University Question Papers
Income Tax/Taxation
A. Theory Questions
Income from House Property

Q.1 What do you mean by annual value? (Nannaya, 2017, Krishna March, 2018)
Annual Value
Annual Value or Gross Annual Value of any property shall be the sum for which the property
might reasonably be expected to be let from year to year. In determining the annual value there are four
factors which are normally taken into consideration.
1. Actual rent received or receivable
2. Municipal value
3. Fair rent of the property
4. Standard rent

Annual Value - Meaning

The annual value of any property comprising of building or land appurtenant thereto, of which the
assessee is the owner, is chargeable to tax under the head “Income from House property’’ (Sec.23).
Before arriving at the Gross Annual Value of a let out house, the following points are to be taken
into account.
1. House let out for the full year without vacancy
2. House let out with vacancy for the part of the year
3. House let out with unrealized rent
4. House let out with vacancy and unrealized rent.

Q.2 Fair rental value and municipal rental value. (Yogivemana, November, 2018)

(a) Fair Rental Value : Fair rent is the rent a similar locality, if the house is let for a year. It is
rental value a house property can fetch. It is based on the rent prevailing for similar type of
accommodation in same or similar type of locality. Such rental value is called Fair Rental
value.
(b) Municipal Value : This is the value determined by the municipal authorities for levying
municipal taxes on house property. On the basis of surveys, the rental values are fixed which
serves as the basis for levying tax. The rental value fixed by the municipal authorities is called
municipal value.
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Q.3 Composite rent and rent from sub-letting. (Acharyna Nagarjuna, November, 2017,
2018, March, 2018, 2019)
Composite Letting
Sometimes, house property may be let out along with furniture, machinery etc. This type of
letting is called composite letting. In case of composite letting income from house property under Income
tax act will be decided in the following way.
Rent received from letting out of building along with the furniture etc., shall be split out in two
parts i.e., (i) from building, and (ii) rent from furniture, other amenities. Rent received from the first
category only is assessable under the head of income from house property and the rent received from
second part is liable under the head `Income from other sources’. Where such rent cannot be split up like
this, the whole rent received shall be taxable under the head income from other sources and not under
house property.
Sub-letting : When main tenant lets out full or part of the hired property to another person it is called
sub-letting. Income, if any, from sub-letting is taxable under the head “Income from other sources.’’ For
example, if X let out his house property to Y for Rs.30,000 p.m. Later Y let out the property of the house
to Z for Rs.10,000 p.m. The rent received by X is taxable under the head House property and income
received by through such letting is taxable under the head Income from other sources.

Q.4 Exempted incomes from House property (Andhra November, 2018)

Exempted Incomes from House Property
Under section 10 of the Income tax Act, 1961 following incomes from house property are
exempted from tax. These incomes are not to be included in the total income of assessee. Hence no tax is
payable on such incomes. These incomes are :
(a) Agricultural House Property [Sec.2(1) [c]
(b) House Property held for charitable purposes [Section 11]
(c) Self-Occupied but vacant house [Section 23(3) ]
(d) House used for own business or profession
(e) Property held by registered trade union [Section 10(24)]

Q.5 How do you compute income from the let out and self occupied house property?
(Andhra November, 2018)
Define Annual value? How you calculate the annual value? (Nannaya, 2017)
Annual Value - Meaning
The annual value of any property comprising of building or land appurtenant thereto, of which the
assessee is the owner, is chargeable to tax under the head “Income from House property’’ (Sec.23).
Before arriving at the Gross Annual Value of a let out house, the following points are to be taken
into account.
1. House let out for the full year without vacancy
2. House let out with vacancy for the part of the year
3. House let out with unrealized rent
4. House let out with vacancy and unrealized rent.
(1) House Let out for the full year : Gross Annual value is to be calculated by calculating the
following.
(i) Expected Rent : (a) Municipal value or Fair Rental Value – whichever is higher is to be
taken. (b) The above arrived value (a) or Standard rent whichever is lower is the expected
rental value.
(ii) Actual Rent Received : The actual rent received or receivable is to be taken.
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Gross Annual Value : The above calculated expected rental value or actual rent received,
whichever is higher, will be gross annual value.
(2) House Property let out with vacancy : In this case there may be two situations.
Situation 1 : if actual rent received or receivable is more than Expected Rent.
(a) Expected Rent : (1) Municipal value or Fair Rental Value – whichever is higher is to be
taken. (2) The above arrived value (1) or Standard rent whichever is lower is the expected
rental value.
(b) Actual Rent Received : The actual rent received or receivable.
Gross Annual Value : The above calculated expected rental value or actual rent received,
whichever is higher, will be Gross Annual Value.
Situation 2 : Actual Rent received is less than Expected Rent : Where the property is let and
was vacant for while or part of the year and the actual rent received or receivable owing
to such vacancy is less than the expected rent, the annual value of the property shall be
determined under this situation if all the following three conditions are satisfied.
(a) The property is let out
(b) It was vacant during the whole or part of the previous year
(c) Owing to such vacancy, the actual rent received or receivable is less than the value
determined.
In this type of situation Actual Rent Received or receivable is Gross Annual Value.
(3) House let out with unrealized rent :
Situation 1 : If rent actually received or receivable (after deducting unrealized rent as per
conditions given below) is more than Expected Rent.
(a) Expected Rent : (a) Municipal rent or Fair rent and whichever is higher is to be taken
first. (b) The above arrived value or standard rent whichever is lower is to be taken.
(b) Actual Rent Received : If rent actually received or receivable (after deducing unrealized
rent is more than Expected rent such rent received or receivable is to be taken as Gross
Annual Value.
Situation 2 : If rent actually received or receivable (after deducting unrealised rent is less
than Expected Rent. If rent actually received or receivable (after deducting unrealized rent) is
less than Expected Rent such Expected rent is to be taken as Gross Annual Value.
(4) Where vacancy and unrealized rent are there :
I. Where the actual rent received or receivable is more than expected rent : The gross annual
value in this case is to be calculated in the following way.
(a) Expected Rent :
1) Municipal Rent or Fair Rent and whichever is higher is to be taken first.
2) The above arrived value or standard rent whichever is lower is to be taken.
(b) Actual Rent :
1) If the rent actually received or receivable for the fully year (after deducting unrealized rent)
is more than the Expected Rent such rent received or receivable is Annual Rent.
2) Such Actual rent is to be reduced by the amount of rent not received due to vacancy.
II. Where the actual rent received or receivable is less than expected rent : In this case the
actual rent received or receivable is to be taken as Gross Annual value.
B. Computation of income from Self occupied (SO) House Property
The property occupied by the owner for his/her residence is known as Self Occupied House
Property. House property owned by the assessee may be occupied by himself or his family members or it
may be used for his own business or profession. The following procedure is to be followed in the
calculation of income from such property.
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1. Occupied for own Business or Profession : Income is chargeable to tax under the head “Profits
and gain from business or profession.”
2. One Self-Occupied Property : The annual value will be taken as Nil
3. Non-Occupation of Self-Occupied Property : Self-Occupied property but could not be
occupied because of his stay in other place due to employment, business or profession. The
annual value of this property is also to be taken as Nil.
4. More than one house under own occupation : Annual value of one house is taken as Nil and
other house/houses are to be taken as deemed to be let.
5. House property consists of various independent units and one is under own occupation and
others are let out : Annual value of one unit is taken as Nil and other unit/units are treated as let
out.
6. If house property is partly let out and partly self occupied, it is to be treated as :
a) if units are inseparable then treat this house as one house and no benefit of self
occupation is to be given.
b) If units are separable, each unit or part is to be treated as separate house;
7. House Property is let out for part of the year and under own occupation for part of the
Year : Whole property is treated as let out house property and no benefit of self-occupancy is to
be given. But actual rent is taken only for number of months for which house property is actually
let out.

Q.6 Deductions U/s 24 (Yogivemana March, 2019; Krishna March, 2017, 2018;
Yogivemana April, 2017, Acharya Nagarjuna April, 2017)
Permissible deductions under the head income from house property. (Krishna March,
2017)
Deductions from Net Annual Value – Let out House Property
After calculating the Net Annual Value the following deductions are to be given under Section
24 in case of Let Out Houses.
1. Standard deduction : 30% of net annual value. This deduction is to be given whether
asked for or not. It is to be given irrespective of the amount spent on repairs, ground rent,
insurance premium etc.
2. Interest on borrowed Capital : Where the property has been acquired, constructed,
repaired, renewed or reconstructed with borrowed capital, the amount of any interest
payable on such capital is allowed as a deduction.
3. Pre-Construction Interest : Interest payable by an assessee in respect of funds borrowed
for the acquisition or construction of a house property and pertaining to a period prior to the
previous year in which such property has been acquired or constructed, to the extent it is not
allowed as a deduction under any other provision of the Act, will be deducted in five equal
annual installments, commencing from the previous year in which the house is constructed.
Pre-Construction Period : Pre-Construction period means the period that a start from the date
of borrowing and end on (a) 31st March preceding the year of completion of construction or
acquisition; or (b) on the date of actual repayment of loan, whichever is earlier. Before deducting
interest on borrowed capital the following points are to be taken into account.
(a) Interest on unpaid interest is not deductible.
(b) No deduction is allowed for any brokerage or commission for arranging the loan.
(c) Interest on fresh loan, taken to repay the original loan raised, is allowed as deduction.
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Deductions from Self Occupied House Property :

(a) Interest on Borrowed Capital : Even though the annual value of self-occupied house is
taken as nil, a deduction towards interest on borrowed capital is to be given. The deduction
to be given is as follows :
Loan borrowed Date Maximum
Interest
allowed
Before 31-3-1999 for house purchase, construction, repairs or ` 30,000
renovation
After 1-4-1999 for house purchase or construction only and such ` 2,00,000
acquisition or construction is completed within 3 years of the end
of the financial year in which the capital was borrowed
After 1-4-1999 for house repairs and renovations ` 30,000
(b) Preconstruction interest : Interest payable by an assessee in respect of funds borrowed
for the acquisition or construction of a house property and pertaining to a period prior to
the previous year in which such property has been acquired or constructed, to the extent it
is not allowed as a deduction under any other provision of the Act, will be deducted in five
equal annual installments, commencing from the previous year in which the house is
acquired or constructed. Before deducting interest on borrowed capital the following
points are to be taken into account.
(i) Interest on unpaid interest is not deductible.
(ii) No deduction is allowed for any brokerage or commission for arranging the loan.
(iii) Interest on fresh loan, taken to repay the original loan raised, is allowed as deduction.
However, where the property is let and was vacant for whole or part of the year and the
actual rent received or receivable owing to such vacancy is less than the sum determined under
clause (a), we have take actual rent as the gross annual value.

Q.7 Explain about the treatment of interest on loan taken for pre-construction period
and post construction period. (Acharya Nagarjuna March, 2018, November, 2018)

1. Treatment of interest on loan in case of Let out house Property :

(a) Interest on borrowed Capital : Where the property has been acquired, constructed,
repaired, renewed or reconstructed with borrowed capital, the amount of any interest
payable on such capital is allowed as a deduction.
(b) Pre-Construction Interest : Interest payable by an assessee in respect of funds borrowed
for the acquisition or construction of a house property and pertaining to a period prior to the
previous year in which such property has been acquired or constructed, to the extent it is not
allowed as a deduction under any other provision of the Act, will be deducted in five equal
annual installments, commencing from the previous year in which the house is
constructed.
(c) Pre-Construction Period : Pre-Construction period means the period that a start from the
date of borrowing and end on (a) 31st March preceding the year of completion of
construction or acquisition; or (b) on the date of actual repayment of loan, whichever is
earlier. Before deducting interest on borrowed capital the following points are to be taken
into account.
(i) Interest on unpaid interest is not deductible.
(ii) No deduction is allowed for any brokerage or commission for arranging the
loan. Interest on fresh loan, taken to repay the original loan raised, is allowed as
deduction.
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2. Treatment of interest on loan in case of Self occupied house Property :

(a) Interest on Borrowed Capital : Even though the annual value of self-occupied house is
taken as nil, a deduction towards interest on borrowed capital is to be given. The deduction
to be given is as follows :
Loan borrowed Date Maximum
Interest
allowed
Before 31-3-1999 for house purchase, construction, repairs or ` 30,000
renovation
After 1-4-1999 for house purchase or construction only and such ` 2,00,000
acquisition or construction is completed within 3 years of the end
of the financial year in which the capital was borrowed
After 1-4-1999 for house repairs and renovations ` 30,000
(b) Preconstruction interest : Interest payable by an assessee in respect of funds borrowed
for the acquisition or construction of a house property and pertaining to a period prior to
the previous year in which such property has been acquired or constructed, to the extent it
is not allowed as a deduction under any other provision of the Act, will be deducted in five
equal annual installments, commencing from the previous year in which the house is
acquired or constructed. Before deducting interest on borrowed capital the following
points are to be taken into account.
(i) Interest on unpaid interest is not deductible.
(ii) No deduction is allowed for any brokerage or commission for arranging the loan.
(iii) Interest on fresh loan, taken to repay the original loan raised, is allowed as deduction.
However, where the property is let and was vacant for whole or part of the year and the
actual rent received or receivable owing to such vacancy is less than the sum determined under
clause (a), we have take actual rent as the gross annual value.

Q.8 Write short note on : (a) Unrealised rent (b) Actual rent (c) Municipal value.
(Acharya Nagarjuna April, 2017)

(a) Treatment of unrealized rent [Sec.23(1)] : The actual rent received or receivable
mentioned in Sec.23 (1)(b) and (c) shall not include the amount of rent which the owner
cannot realize, subject to the rules made in this behalf. In other words, unrealized rent, if any
should be deducted from clause (b) or (c) of section 23(1).

Rules for unrealized rent : The amount of rent which the owner cannot realize shall be
equal to the amount of rent payable but not paid by a tenant of the assessee and so proved to
be lost and irrecoverable where –
(a) the tenancy is bona fide;
(b) the defaulting tenant has vacated, or steps have been taken to compel him to vacate the
property
(c) the defaulting tenant is not in occupation of any other property of the assessee;
(d) The assessee has taken all reasonable steps to institute legal proceedings for the
recovery of the unpaid rent or satisfies the Assessing Officer that legal proceedings
would be useless.

In the Income tax return forms, unrealized rent has been shown as deduction from the
gross annual value (i.e., after taking expected rent or actual rent whichever is higher). It
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is therefore, recommended that unrealized rent should be deducted after computation of

gross annual value.

(b) Actual Rent : It is the rent actually received by the owner of the house property from the
tenant. If the tenant pays composite rent i.e., rent of building plant and machinery, furniture,
etc., and rent is separable, actual rent is to be reduced by the amount of rent of plant and
machinery, furniture etc. Any amount of local taxes paid by tenant, cost of repairs borne by
tenant or any interest on advance deposit are not to be added.

(c) Municipal Value : This is the value determined by the municipal authorities for levying
municipal taxes on house property. On the basis of surveys, the rental values are fixed which
serves as the basis for levying tax. The rental value fixed by the municipal authorities is
called municipal value.

Problems
Special Note : Some change were made in the problems given in the
University Examinations during the earlier years taking into account in the
present previous year 2018-19 and the relevant assessment year 2019-20

1. Calculate the gross annual value of Mr. Vinay in the following cases.

Particulars House 1 House 2 (Rs.) House 3

(Rs.) (Rs.)
(a) Fair rent 1,00,000 1,50,000 6,00,000
(b) Municipal value 2,00,000 5,04,000 3,00,000
(c) Standard rent 1,50,000 - 2,00,000
(d) House rentals (p.m.) 20,000 50,000 25,000
(e) Let out period (in months) 12 6 5
(f) Unrealized rent - 54,000 -
(Krishna November, 2018)
Solution :
Computation of Gross Annual Value of Mr. Vinay
(Assessment year 2019-20)

House 1 House 2 House 3

Rs. Rs. Rs.
Fair Rent 1,00,000 1,50,000 6,00,000
Municipal value 2,00,000 5,04,000 3,00,000
Whichever is higher – Step 1 2,00,000 5,04,000 6,00,000
Standard rent (SR) 1,50,000 - 2,00,000
Step I or SR Whichever is lower : Step 2 1,50,000 5,04,000 2,00,000
Actual rent (AR) 2,40,000 6,00,000 3,00,000
Step II or AR Whichever is higher Step 3 2,40,000 6,00,000 3,00,000
value
Step 3 value 2,40,000 6,00,000 3,00,000
Less : Vacancy loss + Unrealized rent - 3,54,000 1,25,000
Gross Annual value 2,40,000 2,46,000 1,75,000
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2. Calculate gross annual value of Mr. Ajay from the following particulars given below:

Annual rent : Rs.1,02,000 P.a.

MRV : Rs.65,000 P.a.
FRV : Rs.69,000 P.a.
Standard rent : Rs.55,000

The assessee could not realise rent for one month and the house also remained
vacant for three months during the previous year 2018-19.
(Yogivemana, November, 2018)
Solution :
Computation of Gross Annual Value of Mr. Ajay
(Assessment year 2019-20)

Rs. Rs.

Fair Rent 69,000

Municipal value 65,000
Whichever is higher – Step 1 69,000
Standard rent (SR) 55,000
Step I or SR Whichever is lower : Step 2 55,000
Actual rent (AR) 1,02,000
Step II or AR Whichever Step 3 value 1,02,000
1,02,000
Less : Unrealised rent 8,500
Vacancy loss 25,500 34,000
Gross/Net Annual value 68,000
Less : Deduction u/s 24
30% of NAV 20,400
Income from House Property 47,600

3. Mr. Pradeep furnished the following information in respect of a residential house whose
construction is completed 1995 for the assessment year 2019-20.
(i) Annual rent Rs.72,000
(ii) Municipal taxes paid Rs.1,800
(iii) Ground rent payable Rs.60
(iv) Insurance Rs.80
(v) Interest on money borrowed for construction Rs.1,000
(vi) Collection charges paid Rs.300
(vii) Mr. Pradeep mortgaged the property for Rs.50,000 which was spent for his
daughter’s marriage.
(viii) He paid Rs.3,600 as interest on the mortgage loan this year.
Compute his income form house property.
(Sri Krishnadevaraya March, 2019)
Solution :
Computation of Gross Annual Value of Mr. Pradeep
(Assessment year 2019-20)
` `
Gross Annual Value 72,000
Less : Municipal taxes 1,800
Net annual value 70,200
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Less : Deductions u/s 24 :

30% of Net annual value 21,060
Interest on loan taken for construction 1,000 22,060
Income from House Property 48,140

Note : Interest paid on the loan taken for the daughter of the assessee by mortgaging the house
property will not be allowed as deduction.

4. Smt. Pramila Rani is the owner of a house and the following particulars are related to the
previous year 2018-19. Compute income from house property for the assessment year
2019-20.
Municipal rental value Rs.1,25,000
Rent received Rs.2,10,000
Rent of similar building Rs.2,75,000
Interest on loan taken to construct the house Rs.50,000
Standard Rent Rs.2,00,000.
(Sri Krishnadevaraya March, 2019)
Solution :
Computation of Income from House Property of Smt. Pramila Rani
(Assessment year 2019-20)

Rs. Rs.

Fair Rent 2,75,000

Municipal value 1,25,000
Whichever is higher – Step 1 2,75,000
Standard rent (SR) 2,00,000
Step I or SR Whichever is lower : Step 2 2,00,000
Actual rent (AR) 2,10,000
Step II or AR Whichever Step 3 value 2,10,000
Net Annual value 2,10,000
Less : Deduction u/s 24
(1) 30% of NAV 63,000
(2) Interest on loan 50,000 1,13,000
Income from House Property 97,000

5. Compute income from house property from the following information for the previous year
ended 31st March, 2019.
Rent for ¾ portion let out throughout the previous year Rs.2,32,200.
Municipal value Rs.3,06,000.
Fair rent value Rs.3,00,000.
Municipal taxes 10% of municipal value.
Entire amount of municipal taxes are paid by the owner.
Fire Insurance Premium Rs.4,500.
Land revenue Rs.2,100.
Interest of pre-construction period [Gross] Rs.5,000.
(Yogivemana March, 2019)
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Solution :
Computation of Income from House Property
(Assessment year 2019-20)

Rs. Rs.
Let out house
Fair Rent (3/4th) 2,25,000
Municipal value (3/4th ) 2,29,500
Whichever is higher – Step 1 2,29,500
Actual rent (AR) 2,32,200
Step II or AR Whichever Step 3 value 2,32,200
Gross Annual value 2,32,200
Less : Municipal taxes 10% of Rs.2,29,500 22,950
Net Annual value 2,09,250
Less : Deduction u/s 24
(1) 30% of NAV 62,775
(2) Interest of pre-construction period (3/4) 750 63,525
Income from House Property 1,45,725

Note : Assumed that the assessee used ¼th of the house for self occupation and the remaining 3/4th
of the house for let out. Hence we have calculated accordingly.

Rs. Rs.
Self Occupied house (1/4th of the house)
Gross Annual value Nil
Less : Municipal taxes -
Net Annual value Nil
Less : Deduction u/s 24
(1) Interest of pre-construction period 150
(Rs.750/1/5th )
Income from House Property (-) 150
Note : The loss from self occupied House Property Rs.(-) 150 will be allowed to be setoff against
the income from the let out house property.

6. From the following information compute taxable income of Mr. Varma for the assessment
year 2019-20.

Let out H.P.

(Rs.)
Fair rental value 10,83,600
Standard rent value 10,83,840
Actual rental value 10,84,200
Municipal value 10,83,720
Municipal taxes due for the previous year 24,800
Repairs and collection charges 22,000
Municipal taxes relating to 2017 were paid on 10th 15,000
June, 2018 amounting
Ground rent 8,000
Fire Insurance premium 6,000
Interest on loan taken for purchase of house 24,000
property
Rent in arrear for the month of March, 2019 90,350
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(Acharya Nagarjuna March, 2019)

Solution :
Computation of Income from House Property of Mr. Varma
(Assessment year 2019-20)

Rs. Rs.
Municipal value 10,83,720
Fair Rental value 10,83,600
Whichever is higher is Step I value 10,83,720
Standard rent value 10,83,840
Whichever is less is Step 2 value 10,83,720
Actual Rental value 10,84,200
Whichever is higher is Annual value 10,84,200
Less : Unrealised Rent 90,350
Gross Annual value 9,93,850
Less : Municipal taxes 15,000
Net Annual Value 9,78,850
Less : Deduction u/s 24
Standard deduction : 30% of NAV 2,93,655
Interest on Loan taken 24,000 3,17,655
Income from House Property 6,61,195

Note : Assumed that the assessee did not pay the municipal taxes due for the previous year
during the year (Rs.24,800) and hence no deduction is given.

7. From the following information compute taxable income from house property for the
assessment year 2019-2020.

Actual rental value Rs.60,200 per month

Standard rent Rs.60,100 per month
Fair rental value Rs.60,000 per month
Municipal rental value Rs.60,500 per month
Municipal taxes Rs.12% of Municipal value
The owner of house property paid municipal taxes during 2018-19 Rs.70,120
Municipal taxes for 2017-2018 were paid during the current year Rs.15,000
Fire insurance premium Rs.5,500
Ground rent Rs.1,500
Electricity and water charges Rs.8,000
Interest on loan taken for higher studies the assessee Rs.24,000
(Acharya Nagarjuna March, 2018)

Solution :
Computation of Income from House Property
(Assessment year 2019-20)

Rs. Rs.
Municipal value (Rs.60,500 x 12) 7,26,000
Fair Rental value (Rs.60,000 x 12) 7,20,000
Whichever is higher is Step I value 7,26,000
Standard rent value (Rs.60,100 x 12) 7,21,200
Whichever is less is Step 2 value 7,21,200
Actual Rental value (Rs.60,200 x 12) 7,22,400
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Whichever is higher is Annual value 7,22,400

Less : Municipal taxes (Rs.70,120 + 15,000) 85,120
Net Annual Value 6,37,280
Less : Deduction u/s 24
Standard deduction : 30% of NAV 1,91,184
Income from House Property 4,46,096

Note : Assumed that the Electricity and Water charges Rs.8,000 paid by the owner were not
included in the actual rental value.

8. Sri Rangarajan has a house property in Nagpur. During the previous year he has occupied
the house for 4 months for residential purpose and there after he has let out on a monthly
rent of Rs.11,000. The municipal value is Rs.90,000 p.a. and rent Rs.10,000, interest on loan
for constructing the house was Rs.24,000. Municipal taxes @ 10%. Compute income from
house property.
(Acharya Nagarjuna April, 2017, Krishna March, 2018)

Solution :
Computation of Income from House Property
(Assessment year 2019-20)

Rs. Rs.
Municipal value 90,000
Fair Rental value (Rs.9,000 x 12) 1,08,000
Actual Rental value (Rs.11,000 x 12) 1,32,000
Whichever is higher is Gross Annual value 1,32,000
Less : Municipal taxes (Rs.90,000 x 10/100) 9,000
Net Annual Value 1,23,000
Less : Deduction u/s 24
Standard deduction : 30% of NAV 36,900
Interest on Loan 24,000 60,900
Income from House Property 62,100

9. From the following particulars compute Income from house property of Smt. Lavanya.
M.R.V. Rs.6,000 p.m.
F.R.V. Rs.6,500 p.m.
Standard rent Rs.5,800 p.m.
Municipal taxes Rs.10,800 p.a.
Rent per month Rs.6,600
Vacancy period 1 month
Unrealized rent 1 month rent
Fire Insurance premium Rs.2,100
Interest on loan taken to repair of the houses Rs.50,800.
(Krishna March, 2017)
Solution :
Computation of Income from House Property of Smt. Lavanya
(Assessment year 2019-20)
Rs. Rs.
Municipal value 72,000
Fair Rental value (Rs.6,500 x 12) 78,000
Whichever is higher 78,000
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Standard rent 69,600

Whichever is lower 69,600
Rent received 79,200
Whichever is higher is Gross Annual value 79,200
Less : Vacancy loss 6,600
Unrealised rent 6,600 13,200
Gross Annual value 66,000
Less : Municipal taxes 10,800
Net Annual Value 55,200
Less : Deduction u/s 24
(1) Standard deduction : 30% of NAV 16,560
(2) Interest on Loan for repairs 30,000 46,560
Income from House Property 8,640
Note : Interest on loan taken to repair the houses will be restricted to Rs.30,000 only under
Section 24.

10. Compute income from house property of Mr. Madhavan :

Particulars House A (Rs.) House B (Rs).

Municipal value 40,000 60,000
Fair Rental value 60,000 80,000
Standard rent 75,000 68,000
Actual Rent 50,000 90,000
Municipal taxes 10% 15%
Interest on loan 8,000 10,000
Date of construction 1.6.2012 12.04.2018
Pre-construction interest 40,000 20,000
Actual repairs 8,000 6,000
(Krishna March, 2017)
Solution :
Computation of Income from House Property of Mr. Madhavan
(Assessment year 2019-20)

House A House B
Rs. Rs.
Municipal value 40,000 60,000
Fair rental value 60,000 80,000
Whichever is higher – Step 1 60,000 80,000
Standard rent (SR) 75,000 68,000
Step I or SR Whichever is lower : Step 60,000 68,000
2
Actual rent (AR) 50,000 90,000
Step II or AR Whichever is higher Step 60,000 90,000
3 value
Gross Annual Value 60,000 90,000
Less : Municipal taxes 4,000 9,000
Net Annual value 56,000 81,000
Less : Deduction u/s 24
(1) Standard Deduction : 30% of NAV 16,800 24,300
(2) Preconstruction interest Nil 4,000
(3) Interest on loan 8,000 24,800 10,000 38,300
Income from House Property 31,200 42,700
 -14-

11. “A” is the owner of two house properties who’s particulars are as under. Computer income
from house property.
Particulars House “A” House “B”
Municipal value 80,000 1,00,000
Fair rental value 1,00,000 1,20,000
Standard rent 90,000 75,000
Nature of use Self occupied Self occupied
Municipal taxes 10% 15%
Interest on loan 15,000 14,000
Date of construction 30.6.2012 30.9.2004
Pre-construction interest 40,000 10,000
Repairs 10,000 8,000
(Krishna March, 2018)
Solution :
Computation of Income from House Property of Mr. A
(Assessment year 2019-20)
House A House B
(Self (Let Out)
occupied)
Rs. Rs.
Municipal value - 1,00,000
Fair rental value - 1,20,000
Whichever is higher – Step 1 - 1,20,000
Standard rent (SR) - 75,000
Step I or SR Whichever is lower : Step 2 - 75,000
Gross Annual Value Nil 75,000
Less : Municipal taxes - 15,000
Net Annual value - 60,000
Less : Deduction u/s 24
(1) Standard Deduction : 30% of NAV - 18,000
(2) Interest on loan - 14,000 32,000
Income from House Property Nil 28,000

Note :
(a) House A is selected as self occupied. It is having less Income under the Head House
Property compared to House B. Hence House A is selected as Self occupied House.
(b) Pre construction interest deduction 1/5th of Net Annual value is to be given Under Section
24 for five years from the date of construction. Both these cases pre-construction interest
deduction was given already for five years and hence it is not applicable now.

12. Murali Krishna is the owner of a house at Ranchi. It is let out on a monthly rent of
Rs.8,000. It’s municipal value Rs.90,000 and fair rent Rs.94,000. Construction of the
house was completed in 2006. He paid local taxes Rs.6,000; repairs Rs.5,000; annual
charges Rs.8,000 and interest on borrowed capital Rs.27,000. The house remains vacant
for one month during the previous year. Compute income from house property for the
assessment year 2019-20.
(Yogivemana April, 2017)
 -15-

Solution :
Computation of Income from House Property of Sri Murali Krishna
(Assessment year 2019-20)
Rs. Rs.
Municipal value 90,000
Fair Rental value 94,000
Whichever is higher – Step I 94,000
Actual Rental value (Rs.8,000 x 12) 96,000
Whichever is higher – Step II 96,000
Less : Vacancy loss 8,000
Gross Annual value 88,000
Less : Local taxes 6,000
Net Annual value 82,000
Less : Deduction u/s 24
(1) Standard deduction : 30% of NAV 24,600
(2) Interest on Loan for repairs 27,000 51,600
Income from House Property 30,400

13. Compute the total income of Jayakrishna with the details of his house property given below
for the assessment year 2019-20. 20% of the house is used for own residence. Another 30%
used for own profession. Remaining 50% is let out for residential purpose.
Rs.
Municipal value 1,50,000
Rent of portion let out 70,000
Municipal taxes 14,000
Repairs 25,000
Ground rent due 3,000
Land revenue 4,000
Annual charge 6,000
Interest on borrowed capital 8,000
Income from profession 90,000
(Yogivemana April, 2017)

Solution :
Computation of Income from House Property of Mr. Jayakrishna
(Assessment year 2019-20)

Let out Self

occupied
Rs. Rs.
Municipal value 75,000 Nil
Actual Rent 70,000 -
Whichever is higher – Step 1 75,000 -
Gross Annual Value 75,000 Nil
Less : Municipal taxes (50%) 7,000 -
Net Annual value 68,000 Nil
Less : Deduction u/s 24
(1) Standard Deduction : 30% of NAV 20,400
(2) Interest on borrowed capital 50% 4,000 24,400 (-) 1,600
Income from House Property 43,600 (-) 1,600
 -16-

Computation of Total Income of Mr. Jayakrishna

(Assessment year 2019-20)

Rs. Rs.
Income from House Property
Let out house 43,600
Less : Set off of Loss from Self occupied (-) 1,600
house property
42,000
Income from profession 90,000
Total Income 1,32,000
Note : Assumed that the assessee took the house used for profession into account while calculating
professional income.