Chapter
PART II
INDIRECT TAX (GST & CUSTOMS)
CHAPTER
Q.1 Discuss the term Deemed Ownership of the house property as given under section 27. [June 2014 New] [6 Marks]
Ans.: In addition to legal ownership, following persons are treated as deemed owner under section 27:
1.Transfer to spouse or minor child.
2.Holder of Impartible Estate.
3.Property held as a member of Co-operative Society.
4.Property acquired under Power of Attorney Transactions.
5.Acquired a right in building under section 269UA(f).
Q.2 Distinguish between taxation of unrealized rent and recovery of unrealized rent. [Dec. 2011] [4 Marks]
Ans.:
Unrealized rent is deducted in calculation of gross annual value. Unrealized rent recovered late on is taxable in the previous year of its receipt after allowing 30% Standard Deduction.
Q.3 Naveen owns a house at Indore. Its municipal valuation is ` 24,000. He incurred the following expenses in respect of the house property: Municipal tax @ 20%, fire insurance premium ` 2,000 and land revenue ` 2,400. He took a loan of ` 25,000 @ 16% per annum on 1st April, 2022. The whole amount is still unpaid. The house was completed on 1st March 2025. Find out the Income from House Property for the Assessment Year 2026-27 in respect of the following options:
1.If the house is used by the assessee throughout the previous year for his residential purposes and
2.If the house is let-out for residential purposes on monthly rent of ` 2,000 from 1st April, 2025 to 31st January, 2026 and self-occupied for the remaining period.[June 2010] [6 Marks]
PART I : DIRECT TAX
Ans.:
(i) When the house remained Self-Occupied throughout the Previous Year 2025-26
Particulars(`)(`)
Net Annual ValueNIL
Less: Interest on Loan
(i) For Current Previous Year (25,000 × 16/100)(4,000)
(ii) For Construction Period from 01-04-22 to 31-03-24
[` 25,000 × 16241 100125 ] (1,600)(5,600)
Loss from House Property(5,600)
(ii) When the house remained Let-Out for 10 months and Self-Occupied for 2 months in the Previous Year 2025-26.
Particulars(`)(`)
Gross Annual Value (Actual rent received)20,000 Less: Municipal Taxes(4,800)
Net Annual Value15,200 Less: Standard Deduction(4,560)
Less: Interest on Loan
(i) For Current Previous Year (25,000 × 16/100)(4,000)
(ii) For Construction Period from 01-04-22 to 31-03-24
[` 25,000 × 16241 100125 ] (1,600)(10,160)
Income from House Property5,040
Q.4 Anurag owns three houses the particulars of which are given below: ParticularsHouse A (`)House B (`)House C (`)
Rent90,0001,00,0001,10,000 Monthly Rent8,0009,00012,000 Rent collection Charges8,00010,0006,000 Repair Expenses5,0006,0004,000 Interest on Loan
- For Construction40,000
- For Marriage of Son30,000
- For Repairs8,000
Commencement of Construction04-04-201804-01-202004-07-2021
Completion of Construction31-03-202530-06-202231-12-2023
Municipal tax is charged @ 10%. Anurag paid municipal tax of House A but did not pay municipal tax of House B. The tenant paid the municipal tax of House C which remained vacant for 3 months.
Compute Income from House Property of Anurag for the Assessment Year 2026-27. [Dec. 2010] [6 Marks]
Ans.:
Computation of Income from House Property of Anurag for Assessment Year 2026-27
Particulars(`)(`)(`)
1.House A (Let-out for Residence):
Gross Annual Value (Actual Rent)96,000
Less: Municipal Taxes Paid(8,000)
Net Annual Value88,000
Less: Standard Deduction (@ 30% of ` 88,000)(26,400)
Less: Interest on loan for current previous year relating to construction (` 40,000 × 1/5) (8,000)(34,400)53,600
2.House B (Let-out for Office):
Gross Annual Value (Municipal Valuation)1,20,000
Less: Municipal Taxes paid(NIL)
Net Annual Value1,20,000
Less: Standard Deduction (@ 30% of ` 1,20,000)(36,000)84,000
3.House C (Let-out for Residence):
Actual Rent1,44,000
Less: Loss due to vacancy(36,000)
Gross Annual Value1,08,000
Less: Municipal Taxes Paid(NIL)
Net Annual Value1,08,000
Less: Standard Deduction (@ 30% of ` 1,08,000)(32,400)
Interest on loan for repairs(8,000)(40,400)67,600
Taxable Income from House Property2,05,200
Q.5 Sanjeev owns a house property. Following are the details about the property:
Municipal value of house ` 72,000 per annum.
Fair rent of house ` 66,000 per annum.
Standard rent of house ` 60,000 per annum.
PART I : DIRECT TAX
The house was let out at ` 6,000 per month but was sold on 1st January, 2026.
Find out Income from House Property for the Assessment Year 2026-27. [June 2012] [5 Marks]
Ans.:
Computation of Income from House Property (Assessment Year 2026-27) (`)
Gross Annual Value
(Actual Rent for 9 months from 1-4-2025 to 31-12-2025 @ ` 6,000 pm)
Less: Municipal Taxes paid by assessee during the year(NIL)
Net Annual Value (NAV)54,000
Less: Deduction under section 24
(a) Standard deduction @ 30% of NAV [Section 24(a)] (16,200)
(b) Interest on Borrowed Capital [Section 24(b)] (Nil)(16,200)
Taxable Income from House property37,800
Q.6 Riya has a house property in Delhi, particulars of which are as under:
- Interest on money borrowed for acquiring the house after 1st April, 2022 16,000
- Actual Rent for 10 months35,000 per month
- Period of occupation for own residence2 months
Compute the Income from House Property for the Assessment Year 2026-27. [Dec. 2012] [5 Marks]
Ans.:
Computation of Taxable Income from House Property of Riya for Assessment Year 2026-27
Particulars(`)(`)
Gross Annual Value (Actual Rent)3,50,000
Less: Municipal Taxes paid(50,000) Net Annual Value3,00,000
Deductions:
CH. 5 : INCOME UNDER THE HEAD HOUSE PROPERTY 5.5
Particulars(`)(`)
(i) Standard Deduction @ 30% of ` 3,00,000(90,000) (ii) Interest on Loan(16,000)(1,06,000)
Taxable Income from House Property1,94,000
Q.7 Kapil owns a house at Pune. From the following particulars, compute the Total Income under the head ‘Income from House Property’ for the Assessment Year 2026-27.
S. No.Particulars(`)
1.Municipal Valuation5,00,000
2.Fair Rental Value5,60,000
3.Actual Rent Received (` 25,000 per month)3,00,000
4.Standard Rent5,20,000
5.Municipal Taxes Paid (half of it was borne by the tenant)25,000
6.Expenses on Repairs15,000
7.Fire Insurance Premium Paid12,000
8.Ground Rent16,000
He had borrowed a sum of ` 20,00,000 @ 10% per annum from LIC Housing Ltd. On 1st August, 2022 and the construction of the house was completed on 1st January, 2025. Total loan is still unpaid. [June 2014] [5 Marks]
Ans.:
Computation of Income from House Property of Kapil for Assessment Year 2026-27
Particulars(`)(`)
Gross Annual Value (Standard Rent) 5,20,000
Less: Municipal Taxes Paid12,500
Net Annual Value 5,07,500
Less: Standard Deduction @ 30%(1,52,250)
Less: Current Year Interest(2,00,000)
Less: Construction Period Interest (01-08-2022 to 31-032024) 1/5 of it
[` 20,00,000 × 10201 100125 ] (66,667)(4,18,917)
Taxable Income From House Property88,583
PART I : DIRECT TAX
Q.8 Nisha, a resident of India owns a house property at Karnal in Haryana. The municipal value of the property is ` 7,50,000, fair rent of the property is ` 6,30,000 and standard rent is ` 7,20,000 per annum. The property was let out for ` 75,000 per month for the period April, 2025 to December, 2025.
Thereafter the tenant vacated the property and Nisha used the house for self-residence. Rent for the months of November and December, 2025 could not be realized from the tenant. The tenancy was bona fide but the defaulting tenant was in occupation of another property of the assessee, paying rent regularly. She paid municipal tax @ 12% during the year and paid interest of ` 35,000 during the year for amount borrowed towards repairs of the house property.
You are required to compute her Income from ‘‘House Property’’ for the Assessment Year 2026-27. [June 2019] [5 Marks]
Ans.: Computation of Income from House Property of Ms. Nisha for Assessment Year 2026-27
Particulars(`)
Gross Annual Value (Standard Rent)7,20,000
Less: Municipal Taxes paid (12% of ` 7,50,000)(90,000)
Net Annual Value6,30,000
Less: Deduction u/s 24:
(a) Standard Deduction (30% of NAV)(1,89,000)
(b) Interest on amount borrowed for repairs(35,000)
Income from House Property4,06,000
Computation of Gross Annual Value:
Expected Rent for the Whole Year = Higher of Municipal Value of ` 7,50,000 and Fair Rent of ` 6,30,000. But restricted to Standard Rent of ` 7,20,000, So Expected Rent is ` 7,20,000.
Actual Rent received for let out period = ` 75,000 × 9 = ` 6,75,000.
Gross Annual Value is higher of Expected Rent or Actual Rent Received, but restricted to Standard Rent = ` 7,20,000.
Q.9 Anand owns a house at Delhi. From the following particulars, compute the Income from House Property for the Assessment Year 2026-27.
Particulars(`) Municipal Valuation2,50,000
Rental Value2,80,000
Actual Rent @ ` 25,000 per month3,00,000
Rent2,60,000
taxes paid (Half of it was borne by the tenant)25,000
Rent1 Month Vacancy Period1 Month
He had borrowed a sum of ` 20,00,000 @ 10% p.a. from LIC Housing Limited on 1st August, 2022 and the construction of the house was completed on 1st January, 2025. Total loan is still unpaid. [Dec. 2011] [5 Marks]
Ans.:
Computation of Income from House Property of Anand for Assessment Year 2026-27
Step I: Computation of Expected Rent:
(a)Municipal Valuation2,50,000 OR Fair Rental Value2,80,000 Whichever is Higher2,80,000
(b)Standard Rent2,60,000 (c)Expected Rent = Lower of (a) and (b)2,60,000
Step II: Computation of Gross Annual Value:
(a)Actual Annual Rental 3,00,000 (b)Expected Rent2,60,000
Actual Annual Rent is higher than Expected Rent. Hence actual rent received after considering unrealized rent ` 25,000 and Vacancy loss ` 25,000 is ` 2,50,000, will be taken as Gross Annual Value u/s 23(1)(c).
1. Gross Annual Value2,50,000
2. Less: Municipal Taxes paid (12,500)
3. Net Annual Value2,37,500
4. Less: Deductions:
(a) Standard Deduction 30% of NAV71,250
(b) Interest on Loan (Current Year) 2,00,000
(c) Interest for Construction Period (20,00,000 × 10201 100125 ) 66,667 (3,37,917)
5. Loss under the head House Property 1,00,417
PART I : DIRECT TAX
Q.10 Mr. Nitin completed construction of a residential house on 01.04.2025. Interest paid on loans borrowed for the purpose of construction during the 30 months prior to completion was ` 60,000. The house was let-out on a monthly rent of ` 18,000.
Annual corporation tax paid ` 35,000
Interest paid during the year ` 25,000
Amount spent on repairs ` 6,000
Fire insurance premium paid ` 3,000 p.a.
The property was vacant for4 months
Annual letting value as per corporation records ` 1,50,000
He had also received arrears of rent of ` 36,000 during the year, which had not been charged to tax in the earlier year.
Compute the income under the head “Income from House Property” for the assessment year 2026-27. [CMA Dec. 2012] [8 Marks]
Ans.:
Computation of Income from House Property (Assessment Year 2026-27)
ParticularsAmount (`)
Gross Annual Value (Note 1)1,44,000
Less: Municipal Taxes paid (35,000)
Net Annual Value (NAV)1,09,000
Less: Deduction under section 24
Standard Deduction (30% of ` 1,09,000) (32,700)
Interest on Borrowed Capital
Current Year (25,000)
Pre-construction Period (` 60,000 × 1/5) (12,000)(69,700)
Income from House property (Let out portion)39,300
Arrears of rent received
Arrear of Rent received36,000
Less: Deduction under section 25A
Standard Deduction (30% of ` 36,000) (Note 2) (10,800)
Income from arrears of rent25,200
Taxable Income from House property 64,500
Working Notes:
1. The NAV of the house property is determined as under:
Step 1: Computation of Expected Rent
(a) Municipal Valuation : ` 1,50,000
(b) Fair Valuation:NA
(c) Higher of (a) and (b): ` 1,50,000
(d) Standard Rent :NA
Expected Rent = Lower of (c) and (d) = ` 1,50,000
Step 2: Computation of Gross Annual value
(i) Expected Rent (As per step 1) : ` 1,50,000
(ii) Actual Rent received/receivable : (a) If there is no vacancy (18,000 × 12) : ` 2,16,000 (b) In case of Vacancy (18,000 × 8) : ` 1,44,000
Gross Annual value: The rent receivable is higher than expected rent. Thus, the rent received (considering vacancy) i.e. ` 1,44,000 shall be GAV [Section 23(1)(c)].
2. As per section 25A, the arrears of rent received are taxable in the year in which arrears have been received. However, deduction shall be allowed @ 30% of such arrears and only the balance amount is taxable.
Q.11 Varun has two let out properties, the details for the previous year 2025-26 are given as under:
tax due for the year30,0001,20,000 Municipal tax of past years paid during the year37,0001,03,500
on moneys borrowed CY Paid3,50,0002,70,000 Interest on moneys borrowed CY not paid1,10,00090,000
Compute income under the head ‘house property’ in the hands of Varun for the assessment year 2026-27, assuming none opted to pay tax under section 115BAC. [Dec. 2023] [5 Marks]
Ans.:
Computation of Income from House Property of Varun for Assessment Year 2026-27
House –I (Let-out):
Gross Annual Value (Actual Rent)6,00,000
Less: Municipal Taxes paid(37,000)
Net Annual Value5,63,000
Less: Standard Deduction (30% of net annual value ` 5,63,000) (1,68,900)
Less: Interest on money borrowed (` 3,50,000 + ` 1,10,000)(4,60,000)(65,900)
House II (Let-out):
Gross Annual Value (Standard Rent)6,90,000
Less: Municipal Taxes paid(1,03,500)
Net Annual Value5,86,500
Less: Standard Deduction (30% of net annual value)(1,75,950)
Less: Interest on money borrowed (` 2,70,000 + ` 90,000)(3,60,000)50,550
Loss from House Property(15,350)
Q.12 Sanjay has a house consisting of two identical units. One unit is self-occupied and the other is let out for a monthly rent of ` 30,000 throughout the financial year 2025-26. Municipal tax paid during the year for the total house property amounts to ` 70,000 (which was paid by cash ` 30,000 and through online banking ` 40,000). The house property was constructed out of housing loan taken from SBI on 1st July, 2022 for ` 30 Lakh @ 8% interest. The construction of property was completed on 30th March, 2024 and whole of the loan amount was still outstanding at that day. Interest on housing loan for the financial year 2025-26 was due but not paid.
Compute Income from House Property of Sanjay for the assessment year 2026-27, assuming he has not opted to pay tax under section 115BAC. [June 2024] [5 Marks]
