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INCOMEFROMHOUSEPROPERTY

Course

Material

MBA II YRSEM -1

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CHARGEABILITY

Any income from the house property & land apparent there

to. However the dueling house adjacent to the firm will be

exempted as the agricultural income.

Who is taxable-

Real owner

Deemed Owner

Transfer of House to spouse (except with an agreement to live

appart)/ minor child except a married daughter without properconsideration- the transferor.

Holder of an Inpartiable Property of HUF- Karta will be Taxable

Members of Co-operative Society.

Tenant having tenancy right more than 12 years

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CHARGEABILITY

Residential Property is not taxable. Only one property can be exemptedin case of ownership of more than one Property.

Rent from vacant land and from hiring of building along with themachinery will be taxable under Other source.

The rent from business of renting of House property will be taxable

under house Property.

House partly self occupied & partly rented needed to considered asseparate premises.

House kept as mortgage in the money laundering business will also betaxable under H.P.

Residents having Income from Foreign Estates are taxable .

Non Residents having Income from Foreign Estates are taxable onlywhen received in India.

Composite rent when not separable for benefits provided will be taxable

under H.P. (Separable- facilities- Other Sources, house- H.P.)

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PROPERTY INCOMES EXEMPT

FROM TAX

Income from a farm house [section 2(1A) (c) and section 10(1)].

Property of an ex-ruler [section 10(19A)].

Property income of a local authority [section 10(20)].

Property income of an approved scientific research association[section 10(21)].

Property income of an educational institution and hospital [section10(23C)].

Property income of a registered trade union [section 10(24)].

Income from property held for charitable purposes [section 11].

Property income of a political party [section 13A].

Income from property used for own business or profession [section

22].

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COMPUTATIONOFINCOMEUNDERH.P.

A. Fair Market Value (FMV) XXXB. Municipal Value XXX

C. Take the Higher XXX

D. Standard Rent XXX

E. Take the Lower (ERV)(Expected Rental Value XXX

F. Actual Rent- Unrealized rent XXX

G. Take the Higher (Gross Annual Value) XXX

Less: Municipal Taxes XXX

Net Annual Value XXX

Less: Deductions under Section 24 XXX

Statutory Deduction (30% of NAV) XXX

Interest on Borrowed Capital XXX

Income From House Property XXX

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DEDUCTIONS UNDER SEC 24

Statutory deduction: 30 % of NAV irrespective of therepair & maintenance Expenses.

INTEREST ON HOUSING LOAN

In case the property is let out, the entire amount ofinterest accrued during the year is deductible. The

borrowals may be for construction/acquisition or

repairs/renewals.

A fresh loan may be raised exclusively to repay theoriginal loan taken for purchase/ construction etc., of

the property. In such a case also, the interest on the

fresh loan will be allowable.

Interest payable on interest will not be allowed.

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INTEREST ON HOUSING LOAN

Brokerage or commission paid to arrange a loan for houseconstruction will not be allowed.

When interest is payable outside India, no deduction will be

allowed unless tax is deducted at source or someone in India istreated as agent of the non-resident

Should be taken from Banks

The Deduction is only available to the borrower not to hissuccessors.

Non refundable loan from Provident fund will be allowed only onthe portion of owners contribution.

Purchase of house Property on Installments- The Interest can bedeductable only.

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DEDUCTIONINCASEOFSELF

OCCUPIEDHOUSEPROPERTY

The Property purchased Before 1999-2000

Pre Construction Interest(PCI)/5 < Rs30,000/-

Current year Interest < Rs30,000/-

The Property purchased After 1999-2000

{Pre Construction Interest(PCI) + Current year Interest }/5