INCOME FROM HOUSE

PROPERTY
(S.Y.BBA, VNSGU)

PREPARED BY:
PROF. AVNIT CHADHA
(NET, GSET, C.S., LL.M., M.COM)
 INCOME FROM HOUSE PROPERTY
Computation of Taxable Income from House Property of ____________
P.Y. 2019-20 A.Y. 2020-21
STEP – 1: EXPECTED RENT (Municipal Value or Fair Rent, whichever is higher, as compared
with Standard Rent, whichever is lower)
STEP – 2: ANNUAL RENT received / receivable (do not consider vacancy period)
(-) Expenses paid by owner for tenant’s amenities (liftman’s salary, gardener’s salary,
electricity consumption, expenses of water)
(-) Irrecoverable / unrealized rent
STEP – 3: GROSS ANNUAL VALUE (Step 1 or 2, whichever is higher)
STEP – 4: Gross Annual Value
(-) Loss of rent due to vacancy
= FINAL GAV
(-) municipal / local taxes
= NET ANNUAL VALUE (NAV)
LESS: Specific Deductions:
1. Standard deduction (30% of NAV)
2. Interest on borrowed capital of previous year
3. Interest for pre-construction period / Capitalised interest
= TAXABLE INCOME FROM HOUSE PROPERTY

NOTES:
1. Interest on loan to be considered for only 4 purposes:
a. To acquire
b. To construct
c. To repair
d. To reconstruct / renew
2. Interest on pre-construction period to be deducted in 5 equal annual installments
a. Start date – date of taking loan
b. End date – 31st March immediately preceeding the year in which construction is
completed OR date of repayment of loan, whichever is earlier
3. Interest on loan for Self-Occupied House:
a. Loan taken before 1-4-1999 – maximum deduction Rs.30,000
b. Loan taken after 1-4-1999 –
i. For repairs / reconstruction – maximum deduction Rs.30,000
ii. For purchase / construction – maximum deduction Rs.2,00,000
4. Only maximum 2 houses can be considered as Self-Occupied, if there are more than 2 S.O.
houses, select 2 as S.O. and other houses will be considered as Deemed Let Out
5. CALCULATION:
a. Let-out house: all steps
b. Deemed let-out house: Step-1 = Step-4
c. Self-occupied house: direct deduction of interest
d. Partly let-out and partly self-occupied: separate for L.O. and S.O.
e. Let-out for part of year and self-occupied for remaining part: consider as deemed
let-out for entire year