Income from House Property

 

 

Hi all,

 

this time I am going to let you know how to plan your income from house property.

 

As you know that any rental income earned on House property is charged under "Income from House Property", it is important to know how you can get to know your tax liability under the same heading.

 

I am going to plot this into three Phases.

 

Phase 1: Recognise your Income

 

Phase 2: Recognise your Deductions

 

Phase 3: Calculate tax

 

 

Phase 1: Recognise your Rental Income

 

Here annual Income does not mean the actual rent you receive. This has to be decided with reference to Municipal value or rent receivable subject to standard rent fixed if any. cause neither case rent can exceed standard rent.

 

Gross annual value is higher of rent received or receivable or Municipal value.

 

Once we get the Gross annual value the next phase is to get Net annual Value.

 

Net annual value (NAV) is arrived after deducting 30% on Gross Anual value.

 

 

Phase 2 : Recognise your deductions

 

Deductions under this head is primarily governed by section 24 of Income tax act.

 

there are two clauses under this section 24.

 

one: if the house is self occupied

Two: If the house is let out

 

The duduction talks about interest on housing loan. That means if you have taken housing loan , you can claim deduction under this head.

 

If the house is used for purely self residential purposes, then the maximun amount that is allowable is Rs.150000.

 

If the house is used for let out then the maximum amount that you can claim is the actual amount you are paying the interest.. It can be of any value.

 

 

Phase 3: Calculate Tax

 

Once you arived at the income chargeable under this head, you have to club all other sources of Income and calculate tax accordingly.

 

 

Thank you