Computation of Income from House Property as per Income Tax Act 1961: A Comprehensive Guide
According to Section 22 of the Income Tax Act, the annual value of house property, including any buildings or associated lands owned by the taxpayer, is subject to income tax under the category “Income from house property.” This applies to the entire property, except for the portions utilized for the taxpayer’s business or profession, whose profits are taxable under income tax.
Computation of Income from House Property
Determination of Annual value of House Property
Deductions from Income from House Property
Amount not Deductible from Income from House Property
Treatment of arrears of rent or unrealised rent received
Treatment of House Property owned by Co-owners
Determination of Annual value of House Property
In the determination of the Annual Value of a House Property, Section 23 of the Income Tax Act outlines specific criteria for assessment. The annual value is considered to be the amount for which the property could reasonably be expected to let annually. If the property is let, the actual rent received by the owner is taken into account, unless the property was vacant during the previous year, impacting the rent received. In such cases, the owner’s receivable amount is considered. Notably, taxes imposed by local authorities on the property are deductible in determining the annual value for the relevant year.
