Escolar Documentos
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Cultura Documentos
The annual value of property consisting of any buildings or lands appurtenant thereto of which
the assessee is the owner, other than such portions of such property as he may occupy for the
purposes of any business or profession carried on by him, the profits of which are chargeable to
income-tax, shall be chargeable to income tax under the head Income from House Property".
Annual Value of a property which is deemed to be let out for income tax purposes
( when you own more than one house property)
Annual Value of the property which is self occupied, which is Nil
Step 2: Find out rent actually received or receivable after excluding unrealized rent but
before deducting loss due to vacancy
Step 3: Higher of amount computed in Step 1 or Step 2 is taken
Step 4: Find out loss due to vacancy
Step 5: Step 3 minus Step 4 is gross annual value.
Sec 23(1) proviso- Taxes levied by local authority and borne by owner if
paid in relevant previous year
MUNICIPAL TAXES:
Municipal taxes (like house tax, service tax, local tax) levied by any local authority in respect of
the house property are deductible only if these taxes are borne and actually paid by
the owner during the previous year. It doesnt matter whether the taxes belong to the earlier
years, current year or coming years.
If property is situated in a foreign country, municipal taxes levied by foreign local authority are
deductible (if such taxes are paid by the owner).
Under section 24 of the Income Tax Act you are allowed to make certain deduction from the Net
Annual Value of your House Property. Net Annual Value is Gross Annual Value less Municipal
Taxes Paid. In case the property is let out, its rent received is your Gross Annual Value, whereas
in case of a deemed to be let out property, a reasonable rent of a similar place is your Gross
Annual Value. For a self occupied house property the Gross Annual Value is Nil.
Additional tax benefits under section 80EE Section 80EE has been revamped.
Section 80EE allows tax benefits for first time home buyers. Income tax deduction can
be claimed on home loan interest. The deduction allowed under this section is for
interest paid on home loan up to maximum Rs 50,000 per financial year. You can claim
this deduction until you have fully repaid the loan.
An additional deduction of Rs 50,000 on home loan interest can be claimed starting
financial year 2016-17. However to be able to claim this deduction, you must meet the
following conditions:
The loan must be taken between 1st April 2016 to 31st March 2017
As on the date of sanction of the loan the taxpayer should not own any property
The loan must be taken from a financial institution*
The value of the house must be less than Rs 50lakhs
The loan must be for less than Rs 35lakhs
*Financial institution means co-operative banks, RBI licensed banks,housing finance company
If you meet these conditions, you can claim an additional deduction of Rs 50,000 for home
loan interest in addition to Rs 2lakhs. There is no time limit for which this deduction is
allowed, you can claim it for as long as you are repaying the loan.
Extension of time limit for completion of construction Sometimes, taxpayers take
home loans for under construction property. To claim Rs 2lakhs deduction on such home
loan interest, the construction of the property must be completed within 3 years. This
period of 3 years has been extended to 5 years starting 1st April 2016 (Period of 5
years is calculated from the end of the financial year in which loan is taken). Say if you
have taken a loan on 30th April 2015 for a construction linked property. The construction
must be complete by 31st March 2021.
You can start claiming interest deduction in the financial year in which construction of the
property is complete.
Pre-construction interest is allowed when you have taken a loan for purchase or construction
of a house property (not allowed in case of loan for repairs or reconstruction). The deduction for
this interest is allowed in 5 equal installments starting from the year in which the house is
purchased or the construction is completed. For example, if construction of your property
completed in FY 2016-17, on 25th June 2016, you can claim 1/5th of interest paid up till
31st March 2016 when you file your return for FY 2016-17.
Though pre-construction interest is allowed to be deducted on the basis of 1/5 th each year
beginning the year in which the construction is completed the total amount of
preconstruction interest and interest on housing loan that can be claimed in a year should
not exceed Rs 2,00,000 in any case.
Conditions for claiming Interest on home loan deduction You need to meet all the below
3 conditions to claim this deduction
Loan has been take after 1st April 1999 for purchase or construction
The acquisition or construction is completed within 5 years(3 Years till Financial Year
2015-16) from the end of the financial year in which the loan was taken
There is interest certificate available for the interest payable on the loan
Note that your interest deduction may be limited to Rs 30,000 if any one of these
conditions is met
Loan is borrowed before 1st April 1999 for purchase, construction, repairs or
reconstruction of house property
Loan is borrowed on or after 1 st April 1999 for repairs, renovation or reconstruction of
house property.
No Limit
Rented Interest on
property home loan
Another Example:
Let say Rahul has house has a rental income of Rs 40,000 per month and he is paying home
loan interest of Rs 10 lakhs per annum. He has income from remaining heads of Rs 12 Lakhs
p.a. Calculate Income from house property for 2016-17.
Particulars FY 2016-17
Particulars FY 2016-17