Wednesday, 17 December 2014 00:00

What types of Incomes are covered under the head Income from House Property

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WHAT TYPE OF INCOMES IS COVERED:-

Rental income from a property being building or land appurtenant thereto of which the taxpayer is owner is charged to tax under the head “Income from house property”.​​

RENTAL INCOME FROM SUB- LETTING:-

  • Rental income in the hands of owner is charged to tax under the head “Income from house property”.
  • Rental income of a person other than the owner cannot be charged to tax under the head “Income from house property”. Hence, rental income received by a tenant from sub-letting cannot be charged to tax under the head “Income from house property”. Such income is taxable under the head “Income from other sources” or profits and gains from business or profession, as the case may be.

RENTAL INCOME FROM SHOP:-

  • Rental income from a property, being building or land appurtenant thereto, of which the taxpayer is the owner is charged to tax under the head “Income from house property”. To tax the rental income under the head “Income from house property”, the rented property should be building or land appurtenant thereto. Shop being a building, rental income will be charged to tax under the head “Income from house property”.

EXPENSES TO BE DEDUCTED WHILE CALCULATING INCOME FROM HOUSE PROPERTY:-

  • While computing income chargeable to tax under the head "Income from house property" in the case of a let-out property, only following items can be claimed as deductions from gross annual value. In other words, deduction cannot be claimed for any expenditure incurred by the taxpayer other than following:
    • Deduction on account of municipal taxes paid by the taxpayer during the year (*).
    • Deduction under section 24(a) @ 30% of Net Annual Value.
    • Deduction under section 24(b)​​

(*) Only municipal taxes paid by the owner during the year can be deduced, hence, municipal taxes due but not paid during the year cannot be deducted or taxes borne by the tenant cannot be deducted.

DEDUCTION OF INTEREST PAID ON LOANS TAKEN FROM FRIENDS:-

  •  If the loan is taken for purchase, construction, repair, renewal or reconstruction of the house, interest on such loan can be claimed as deduction.
  • If the loan is taken for personal or other purposes then the interest on such loan cannot be claimed as deduction.

DEDUCTION OF INTEREST PAID ON HOUSING LOANS:-

  • While computing income chargeable to tax under the head "Income from house property" in case of a let-out property, the taxpayer can claim deduction under section 24(b)
  • In case of a let-out property, there is no limit on the quantum of interest which can be claimed as deduction under section 24(b). However, in case of a self-occupied property, limit is Rs. 2,00,000 or Rs. 30,000, as the case may be

INCOME FROM SELF OCCUPIED PROPERTY:-

Last modified on Wednesday, 17 December 2014 21:12