Income from House property
CHARGEABILITY OF TAX–Section-22
Rental income from house property is chargeable to Tax under the head income from house property in the hands of the owner of the property. The process of computation of income starts with the determination of annual value of the property.
Condition for chargeability–
Property should consist of any building or land appurtenant thereto.
Assessee must be the owner or Deemed to be owner of the property.
The property may be used for any purpose but it should not be used by the owner for own business or profession.
Property held as stock in trade.
Deemed ownership– section 27
As per section 27 there are some person who are not legal owners of the property but still Deemed to be the owners. following persons are deemed owners of the property:–
An individual who transfers house property without adequate consideration to his/her spouse.
Any individual who transfers house property without adequate consideration to his/her minor child.
Person having right in a property for a period not less than 12 year.
If the buyer has taken the position of the property without getting the sale deed registered is Deemed to be owner of the property.
If property is allotted by the company, Co-operative Society to its shareholders/members, then technically the company/cooperative society may be the owner, but the shareholder/member to whom property is allotted is Deemed to be owner of the property.
COMPOSITE RENT–
The owner of the property may sometimes receive rent in respect of the building as well as other assets like furniture, plant and machinery and different services provided in the building for example lift, security, power backup etc. the amount received is known as composite rent.
Tax treatment of composite rent–
Letting out of building and letting out of other assets are non–separable- entire rent is Tax under the "head income from other sources".
Letting out of building and letting out of other assets are separable– in this situation rent of building is Tax under the head income from house property and land of other assets or facilities is Tax under the head "income from other sources".
TYPES OF HOUSE PROPERTY
Self Occupied
Let-out
Deemed to be get-out
Self occupied house property-
Let-out House property- If a house property is given on rent for the whole or a part of the Year then it is considered as a let out house property.
Deemed to be get-out house property– Deemed to be let out property means if a taxpayer owns more than one residential property they can treat only one of those as self occupied while others will be treated as Deemed to be let out house property.
ANNUAL VALUE- SECTION 23
Tax under this head is not levied on the rent of the property but it is on the capacity of a property to earn income. The basis of measurement of the capacity of property to an income is "annual value" that is gross annual value.
NET ANNUAL VALUE = GROSS ANNUAL VALUE – MUNICIPAL TAX
Calculation of gross annual value–
Municipal rent is the value of the rent determined by the Municipal Corporation based on the property taxes levied on the property.
Fair rent is the value of that property having similar houses as the one under consideration can fetch in the locality.
Standard rent is the maximum possible rent that the property can fetch as per the standard rent Control Act.
Note-:
If property let-out for a period of the year and remaining part of the year property used for own residence the EXPECTED RENT for the whole year shall be compared with the actual rent for the let out period and Whichever is higher shall be adopted as the GAV- Section 23(3)
ANNUAL VALUE OF SELF OCCUPIED PROPERTY WILL BE NIL - Section- 23(3)
In case of a house property, a portion let-Out shall be computed separately under the let out property.
TREATMENT OF UNREALISED RENT -Sec–23(1)
Unrealised rent will be allowed to be excluded from the rent received only when following conditions prescribed in RULE 4 should be satisfied.
The tenancy is bonafide.
The defaulting tenant has vacated or steps have been taken to compel him to the vacate the property;
The defaulting tenant is not in the occupation of any other property of the assessee;
The assessee has taken all the reasonable steps to Institute legal proceeding for the recovery of the unpaid rent or satisfy the assessing officer is the legal proceeding would be useless.
Computation of income under house property
(For the assessment yarr 2021-22)
NOTE-
It should be paid by the owner of the Property.
It should be actually paid (including arrear) during the previous year.
DEDUCTION FROM ANNUAL VALUE- SECTION-24
Standard deduction -Section 24(a)
Standard deduction is 30% of the Net Annual value. This 30% deduction is allowed even when your actual expenditure on the property is higher or lower. For a self occupied house property, since the annual value is Nil, the standard deduction is also zero on such a property. In case of negative annual value, standard deduction is not allowed.
Interest on borrowed capital is allowed as deduction - Section 24(b)
PRE-CONSTRUCTION PERIOD
Pre-Construction period started from the date of loan taken for construction of the house property to ending on 31 st march of the financial year immediately preceding the year in which construction was completed.
The deduction for the interest of pre- Construction Period is allowed in 5 equal annual installment starting from the year in which the construction is completed.
Deduction in respect of let-out or deemed to be let-out house property
Deduction in respect of self-occupied house property-
Loan borrowed before 1 april, 1999- maximum limit of deduction ₹ 30,000.
Loan borrowed after 31 st march, 1999 for purchase or construction of house property– Actual interest payable subject to maximum of ₹ 2,00,000.
Loan borrowed for repair, renewal or reconstruction of house property - maximum limit of deduction ₹ 30,000.
Construction period more than 5 year from the end of the financial year in which the capital was borrowed - maximum limit of deduction ₹ 30,000.
टिप्पणियाँ
एक टिप्पणी भेजें